The turmoil of the Covid-19 crisis has made us all consider our own mortality. There probably isn’t one of us who hasn’t personally been touched by the crisis in some form or another. No one wants to deal with the issues surrounding the end of a life, yet being organised can ease the burden for those left behind. Making and reviewing Wills, making Lasting Powers of Attorney and simplifying your assets are steps everyone should consider, not just the elderly.
Covid-19 sets a bleak picture for many young families who are likely to have to shoulder the tax burden that this crisis will inevitably bring. Inheritance Tax is not the tax to solve the nation's debt problem – it accounts for less than 5% of tax revenue. Planning to minimise Inheritance Tax could make an enormous difference to families and relatives left behind with very little impact on HMRC’s purse.
Ironically, this is a good time to tax plan. Any gifts made while the markets are depressed will freeze the value of that gift for Inheritance Tax. This means that any rise in the value of the asset after the gift is made will be free of IHT. It is worth reflecting on what assets you need to live out your life and whether there is merit in gifting investments or property now while valuations are low. Assets with a paper gain can be transferred into a family trust and any capital gains tax deferred. Family trusts up to the nil rate band will be able to receive that little bit more without triggering tax while valuations are down.
It is human nature to hold onto more assets and wealth than we need. Do we need a change of mind-set to accept our mortality, prepare for the end and enjoy the time we have left? This enjoyment could be enhanced by passing on assets to those who need them now whether this be loved ones or charities.