1. Inheriting tax-The potential Pitfalls which may await

2. Inheriting tax Learning objectives
By the end of this session attendees will be able to understand the advice to be given not just to recipients of lifetime gifts but those giving the assets away. By the end of this session attendees will be able to demonstrate how inheritance tax is calculated on estates and lifetime gifts. By the end of this session attendees will be able to explain the need for differing types of life assurance to meet the needs of those giving and receiving lifetime gifts and ultimately the estate on death.

3. Background

4. 1796 1894 1975 1986 Inheriting tax Death Duty Introduced Estate Duty
Historical Background
1796
Death Duty Introduced
1894
Estate Duty
1975
Capital Transfer Tax
1986
Inheritance tax

5. When was the £325,000 nil rate band introduced?
Inheriting tax
The Inheritance Tax nil rate band is currently frozen at £325,000 until 5 April 2021
When was the £325,000 nil rate band introduced?
2009
£437,088
est 2021
How much would a house worth £325,000 in 2009 be today
£458,994
£506,643
IHT tax take in 2009
£2.4bn 2009
£4.9bn 2016/17

6. Inheriting tax
In the news…

7. Inheriting tax?
Housing wealth in the UK is becoming increasingly concentrated amongst older generations
‘grandparents generation’ aged 65 and over who have a home that they might pass on to children and/or grandchildren; around 4.5 million people in the UK would fall within this category;
‘sandwich generation’ of parents aged who had living parents from whom they might expect to inherit as well as adult children who might be looking for support; around 7.7m UK adults fit this definition;
‘children’s generation’ of adult children aged who have parents and grandparents living in owner-occupied accommodation; we estimate that there are around 4.2m people in this situation in the UK;
£400bn wealth mountain
sandwich generation, the typical expected inheritance from parents was around £160,000
£10-£22.5bn
£50bn lifetime gifts
£7.6-£17.1bn
£38bn lifetime gifts
Source; Royal London April 2017, harassed baby boomers.

8. Inheriting tax
In the news…

9. Case study

10. Inheriting tax Case study
Emily has been contacted by a firm of heir hunters who have notified her of the death of her second cousin Nigel in November Nigel was a paramedic with the London Ambulance service who lived alone in Camden he had a valid will in which he named Emily as the sole beneficiary. Nigel was a keen supporter of his local Shelter and had made various donations throughout his working life making an annual stipend of £1,000 since 2008 and 10% of his estate. In September 2008 his elderly father died leaving him with £392,000 which he placed £312,000 into a discretionary trust to utilise his then nil rate band (2008/09). His colleague and close friend Caroline’s son Eric has autism and Nigel decided to place £35,000 in to a vulnerable person’s trust for Eric in April Nigel’s estate amounts to £803,333 on which there is IHT to pay how much IHT will have to be remitted HMRC to satisfy the tax liability?

11. Inheriting tax
Case study

12. Inheriting tax
Case study
PET
failed

13. Inheriting tax
Case study
CLT
caught

14. £4,000 gift Inter vivos Inheriting tax
Case study
Accumulated Chargeable Lifetime Transfer £312,000 less 2008/09 annual exemption £3,000 less 2007/08 annual exemption £3,000 £306,000
‘Failed’ Potentially Exempt Transfer £35,000 less 2011/12 annual exemption £3,000 less 2010/11 annual exemption £3,000 £29,000 £306,000 £335,000 less Nil Rate band £325,000 excess above NRB £10,000 tax at 40% £4,000 taper to 40% £1,600
£4,000 gift
Inter vivos

15. Inheriting tax
Case study
£11,600
Level term

16. Inheriting tax
Case study
PET
failed

17. Inheriting tax
Case study
‘Failed’ Potentially Exempt Transfer £35,000 less 2011/12 annual exemption £3,000 less 2010/11 annual exemption £3,000 £29,000
Estate £ gift to Shelter £80,333 net estate £723,000 less Nil Rate Band (£325,000 - £29,000) £296,000 excess above NRB £427,000 tax at 36% £153,720 net distributable estate £569,280
£153,720
WOL

18. Inheriting tax Case Study
What did Nigel do for a living? At Budget 2014, the Government announced it would extend the existing exemption for members of the armed forces whose death is caused or hastened by injury while on active service to members of the emergency services responding to emergency circumstances.

19. Inheriting tax Learning outcomes
By the end of this session attendees will be able to understand the advice to be given not just to recipients of lifetime gifts but those giving the assets away. By the end of this session attendees will be able to demonstrate how inheritance tax calculated on estates and lifetime gifts. By the end of this session attendees will be able to explain the need for differing types of life assurance to meet the needs of those giving and receiving lifetime gifts and ultimately the estate on death.

20. YourClient s MyAviv a Find out more at aviva-for-advisers.co.uk
With MyAviva, your clients can view their policy online whenever they want. It can help them become better informed and more engaged. Meaning you get to spend less time dealing with routine questions – and more developing a richer, more rewarding client relationship.
Find out more at aviva-for-advisers.co.uk

21. Smart, simple and convenient
MyAviva is the easy way for your clients to access their policy information online - wherever they are, whenever they want.
Smart, simple and convenient
Built for a digital world
Today, people expect to have convenient online access to their finances, 24/7. MyAviva, gives them just that – allowing your clients to check their basic policy information in just a couple of clicks.
Frees you up
Instead of having to call or you for something simple like downloading a policy document, MyAviva enables your clients to find it themselves. Advisers who are already recommending MyAviva to their clients say it saves them a lot of time they might have spent dealing with basic enquiries.
You retain control
Although your clients can view their basic policy information, they can’t make any changes. Aviva values working with
financial advisers and your relationship with your customer will remain unchanged if they register for MyAviva.
Satisfies clients
Our research shows that customers who use MyAviva are more satisfied.
Encouraging your clients to register for a MyAviva account is an easy way to add value to the excellent service you already provide. Find out more at aviva-for-advisers.co.uk
Aviva Life Services UK Limited. Registered in England No Aviva, Wellington Row, York, YO90 1WR. Authorised and regulated by the Financial Conduct Authority. Firm Reference Number aviva.co.uk
BR /2018

22. Important notes
Information based in this presentation is based on current tax rules, which can change. Tax treatment is based on our interpretation of current legislation and depends on individual circumstances
advisers.co.uk/adviser/site/public/news/ detail/get-into-gear-for-tax-year-end

23. Thank you