Inheritance Tax Service

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 inheritance tax threshold of £325,000, or nil-rate band has failed to increase in line with inflation – in fact it hasn’t increased at all since 2009. 

The Maunby IhT Efficient Portfolio Service is designed to offer a simple, effective strategy to help manage the problem of inheritance tax. As a separately managed inheritance tax portfolio, money is invested in a diversified selection of company shares listed on AIM (the Alternative Investment Market).  Details for the service can be found in the brochure, and each quarter we update the factsheet with our thoughts and performance.

Using an AIM portfolio requires careful thought and discussion. Whilst the tax planning advantages are clear, the risk of loss or relative underperformance may be greater in an AIM portfolio of 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• The exemption from inheritance tax that such shares currently enjoy may be withdrawn by legislation and;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 within our inheritance tax portfolio 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 normally represent no more than 25% of your liquid assets.

 

Download Factsheet Download Brochure

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 with an AIM portfolio.

	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

The above is an example of how you could save on how much inheritance tax your estate might pay.  We would not suggest putting all of your liquid wealth into our IhT efficient portfolio, but as you can see the savings to your beneficiaries can be significant.  This illustration assumes no fall or increase in the value of your assets.

What if I change my mind, or need to draw upon the funds in future?

Alternative ways of mitigating inheritance tax, such as gifts or trusts, may result in the loss of ownership and control.  This can be a daunting prospect given the many uncertainties you may face during the later years of life.  Our IhT efficient portfolio remains in your control at all times, and should your circumstances change such that a withdrawal of some or all of the portfolio is needed, this can be achieved with little fuss or delay.  It is important to always remember when investing that the amount you take out may not always be as much as you put in.

What happens when I am gathered?

A key benefit to Maunby clients is that they are not subjected to the large and unwieldy administrative processes created to suit the firm that is supposed to be serving them.  Upon the death of a Maunby client we remain flexible and engaged, believing that our stewardship does not stop upon death.  We will make sure your Executors receive all the information they need free of charge, we can provide access to capital for the payment of probate or other appropriate costs, and we can arrange for the continued management of the portfolio in a way that suits your beneficiaries.

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.

 

If you are concerned about how much inheritance tax your loved ones or beneficiaries may have to pay then we would be happy to discuss the Maunby IhT efficient portfolio service with you in more detail.  Please feel free to get in touch with us.