INVESTMENTS that you should consider if you wish to reduce your INHERITANCE TAX liability

Few investments are available to investors who wish to reduce their inheritance tax liability, but there are a few that you should consider. As with any kind of tax planning and investing it is always wise to seek professional financial advice before proceeding with any strategy.

To encourage investment in smaller and new start business ventures, the Government encourages people to invest in these ventures by giving them exemption and protection from inheritance tax. However, the exemption is only given provided the investor holds the investment in these ventures for at least two years. They must be owned by the investor at the date of their death. These types of investment benefit from what is called –

Business Property Relief’

There are specialist investment firms that help people to invest in companies that benefit from Business Property Relief. This in turn helps them to reduce their inheritance tax liability.

Before proceeding with this type of Inheritance Tax planning strategy, it is important that you are aware that investments that qualify for Business Property Relief are usually more adventurous and will therefore expose you to higher levels of risk. Understanding how much risk you can afford to take along with how much you wish to reduce your Inheritance Tax liability is very important when deciding if these types of investment are right for you.

As such it is important to fully research your options, and spread your investments so that you are not too concentrated in this area. This will help make sure that your are not overly exposed to a risky investment strategy. It is also important to ensure that your other traditional assets such as large company shares, commercial property, or corporate and government bonds are not overlooked.

Despite the risks involved, this makes Business Property Relief investments a potentially suitable Inheritance Tax planning tool for people who have estates large enough to incur a significant tax charge on death. A married couple with an estate of over £650,000 may have to pay Inheritance Tax and at the current rate of 40%. If you are in this position, this would amount to £40,000 per £100,000 of estate value in excess of the nil rate allowances of £650,000.

These types of investments would be suited to investors  who are either experienced investors or have a large enough estate to need specialist Inheritance Tax planning from a financial adviser.

Action Call

Are you concerned that you may have a large Inheritance Tax liability? Are you considering all options to legitimately and legally reduce the Inheritance Tax liability that would be payable on your death?

Now may be the time to consider your options. Calculating your tax liability, should be the starting point and investigating your options may just be what you need to put on your to do list for the coming year ahead.

If you would like to talk to about financial planning, please get in touch for a no-obligation meeting. Go to our website and contact us via our “Get in touch” form on our home page or Contact Martin Dodd on 01902 742221.

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It is advisable to take advice from a professional financial adviser when making major financial planning decisions.

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This article has been prepared in good faith and based on Midlands Investment Agency’s understanding of the law and interpretation thereof at the time of creation. The contents should not be regarded as specific advice and we always recommend that specific advice is sort from a qualified professional. No responsibility can be accepted by Martin Dodd or Midlands Investment Agency Ltd., for any loss that may occur by a person acting or refraining from acting on the basis of this article.

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