Inheritance Tax Services

As asset and property prices continue to rise year on year, more and more of us are falling within the scope of Inheritance Tax. The nil-rate band of £325,000 hasn’t increased in line with inflation and it hasn’t increased at all since 2009.

The Maunby IhT Efficient Portfolio Service is designed to offer a simple, effective strategy to manage the problem of inheritance tax. As a separately managed portfolio, money is invested in a diversified selection of company shares listed on AIM (the Alternative Investment Market).

However, using this approach requires thought and discussion. Whilst the tax planning advantages are clear, the risk of loss, or of relative underperformance, may be greater in a portfolio of AIM shares for a number of reasons:

• Smaller companies quoted on AIM are subject to greater price volatility than the shares of medium and large companies quoted on a recognised investment exchange;
• The exemption from inheritance tax that such shares currently enjoy may be withdrawn by legislation and;
• The liquidity of smaller companies can be poor, making the acquisition or disposal of shares more difficult.

We mitigate potential losses as far as possible by careful stock selection, diversification through investment in a wide range of companies and sectors, and as a rule, recommending that the size of such a portfolio should represent no more than 25% of your liquid assets.

How can an IhT Efficient Portfolio reduce your Inheritance Tax liability?

One way to demonstrate how holding investments in an IhT efficient portfolio might reduce the IhT burden on your beneficiaries is by an example. The illustration below sets out an example of the savings that might be possible.

	Without an IhT portfolio	With an IhT portfolio
Total Assets	£725,000	£725,000
Less Tax free allowance of £325,000	£400,000	£400,000
Amount in IhT Portfolio (assuming fully invested for two years or more)	£nil	£180,000
Amount liable to IhT	£400,000	£220,000
IhT due	£160,000	£88,000
Possible IhT savings	£nil	£72,000

As this is a specialist service for high net worth clients, it is essential that you carefully consider all the options available in order to make the right decision for your personal circumstances. Tax treatment depends on the individual circumstances of each client and may be subject to change in future.

 

We would be happy to discuss the Maunby IHT efficient portfolio service in more detail, so if you feel this may be of interest please do get in touch with us.