September 2019 - The RU Group

Month: September 2019

A poem for our Financial Planning Manager

thank you poem for our financial planning manager

A media opportunity sees our Financial Planning Manager Nick Onslow help a former Royal Mail employee access his pension. Earlier this year, our Financial Planning Manager Nick Onslow was featured in national newspaper iNews.co.uk. He was contacted by personal finance journalist Elizabeth Anderson to provide advice on a case regarding a former Royal Mail employee …

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Low take up of nil-rate band for inheritance tax

A large house - nil-rate band for inheritance tax

HM Revenue and Customs (HMRC) has reported a new record high for Inheritance Tax receipts received in 2017/18, coming in at around £5.2 billion. However the use of the nil-rate band is lower than expected.

This equates to a £400 million or an 8% year on year increase in the amount received in the 2016/17 tax year. This is despite the introduction in April 2018 of the main residence nil-rate band which, in certain circumstances, allows couples to pass on a family home worth up to £100,000 tax-free, in addition to the already available £650,000 combined nil-rate band.

The last eight years have seen inheritance tax receipts steadily increase, mainly as a result of the rapid rise in property prices (especially in London and the South East) that led to the introduction of the main residence nil-rate band. This residence nil-rate band is due to increase each year until 2020, when a couple will be able to bequest a home worth £1m without incurring tax.

However, this exemption is restrictive and very complicated. Indeed, a Freedom of Information request from financial advice firm NFU Mutual showed that as few as one in six estates have used the new nil-rate band exemption. HMRC data obtained via this FOI request shows that just over 3,000 taxpaying estates claimed the new residence nil-rate band between April and December 2017.

By any standards, this is a very low take-up of a theoretically valuable ‘exemption’. It may be that estates that did not claim the exemption were not eligible for the residence nil-rate band, or it might be that the personal representatives just did not know about it. This nil-rate band does not need to be claimed – according to HMRC, it is included automatically for all qualifying estates.

However, this only works if HMRC has enough detail through probate to know that it applies. If you have not had a professional assessment of the potential inheritance tax liability that could arise on your death, or considered methods of mitigating this, since the residence nil-rate band came into force in April 2017, then we would strongly recommend that you seek advice in this area.

The main nil-rate band of £325,000 per person has been frozen since 2009, so even modest growth in property or investment values will serve to increase inheritance tax liabilities.

Another take on long-term care costs

Long term care costs - couple making a heart shape with their hands

The funding of long-term care is an issue that hasn’t been resolved despite multiple attempts.  A Royal Commission on the subject was established in 1997 and reported in 1999. Its proposals were rejected by the Labour government at the time as too costly to deliver. Since that date there has been a number of reports, …

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