INHERITANCE TAX Archives - Financial Planning in Surrey

When did Bringing Up Baby get political?

Dominic Thomas
Post written: March 2026 • Published: May 2026
4 min read

When did Bringing Up Baby get political?

I was intrigued by a headline in the New Scientist “The Real Reason Birth Rates Are Declining Worldwide”. We are all aware that this has become a rather politicised topic, particularly amongst the right wing, who when pushed want to tax women who don’t have children and make it harder for mothers to work, instead staying at home to raise the children. A return to the archetypal post-war era and infused with regressive politics, religious ‘doctrines’ and patriarchy, all dressed up as “traditional family values”.

The declining birth rate is an important issue in the context of a world population approaching 8.3 billion. As populations age, the theory is that elderly people need more care and medical help, which is increasingly expensive and invariably paid by the State (taxpayers). This impacts Government tax policy and planning. The increase in life expectancy places further pressure on the durability of State pensions, which whilst to some extent paid for whilst working, are generally paid from current taxes, not previous ones. Whilst your State Pension is a record of your National Insurance contributions, that is all it is, there is no pot of savings, merely an account of what you paid and the theory of what you are entitled to. An ageing population also means reduced available housing stock.

These issues have an impact on us all, but particularly on younger people who struggle to find work well paid enough to get themselves onto the property ladder. Unlike most of us, they also had to take on student loans to get a Degree (or two) which increases their personal tax rate by 9%. These very real and practical challenges mean that notions of starting a family often make little financial sense, but it’s dangerous to make too many generalisations. The reasons behind the delay are more nuanced, according to Paula Sheppard (lecturer in Evolutionary Anthropology) from her research at Oxford University.

Global birth rates were 5.1 in the 1960s but have fallen dramatically to around 2.3 today. In Europe it is much lower, at 1.4 to 1.6, even lower in Japan (1.2) and South Korea (0.75). The required ‘replacement rate’ is 2.1 babies per woman.

Sheppard’s research poses the question, “why are people deferring having children?” we may all be able to cite plenty of reasons, but this is research, evidence and data on a grand scale and then subject to interrogation, nuance and insight.

It would seem that much of the research to date leads to the need for secure relationships, University educated women tend to want their partner to be more hands on in the joint care of children and to have a degree of financial security. This cuts to the rub of that “work/life balance” thing, a terrible phrase and somewhat lacking meaning. However in essence, this is about the need for flexible work for both parents. For others housing, or more accurately, good housing in a community with good schools is important.

It is the full time job of politicians, particularly the nasty ones, to conflate these issues rather than consider them methodically. Pointing at problems and blaming it all on the changes in society since the war. The world has moved on, sadly a lot of people have not. Change is invariably frightening and used as a tool to elicit your vote.

What Sheppard points out in her piece in NS, is that predictions from data are invariably fraught with problems. Fertility rates had been ‘worryingly’ low before WW2, we then had the unpredictable ‘baby boom’.

What remains clear is that people will continue to defer having children whilst housing and finances remain substantial challenges.

For your amusement – the trailer for the film Nine Months (1995) Directed by Chris Columbus starring Hugh Grant and Julianne Moore. The actors were both 34 at the time of filming.

References:

The Qualitative Research (published September 2022): https://www.mdpi.com/2076-0760/11/9/409

Paula Sheppard: https://sites.google.com/site/paulajsheppard/home

New Scientist: https://www.newscientist.com/article/2516629-the-real-reasons-birth-rates-are-declining-worldwide/

Global fertility rates: https://ourworldindata.org/fertility-rate

World Data Bank: Global Fertility Rates: https://data.worldbank.org/indicator/SP.DYN.TFRT.IN

UN Global Fertility Rate Report 2024: https://www.un.org/development/desa/pd/sites/www.un.org.development.desa.pd/files/undesa_pd_2025_wfr_2024_final.pdf

World Population – visualising the data: https://worldpopulationreview.com/

Age of the first time buyer in the UK: https://www.ethnicity-facts-figures.service.gov.uk/housing/owning-and-renting/age-of-first-time-buyers/latest/

Land Registry data on first time buyer purchase price: https://www.gov.uk/government/news/uk-house-price-index-for-december-2025

Your National Insurance Record: https://www.gov.uk/check-national-insurance-record

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When did Bringing Up Baby get political?Jemima Thomas2026-05-18T08:42:03+01:00

Was this the biggest moment of the year?

Dominic Thomas
Post written: March 2026 • Post published: May 2026
4 min read

Was this the biggest moment of the year?

We are all aware that all is not well in our own nation. You are right, society does need to change, but possibly not for the reasons you think. This is a political piece, it may offend you, that is not my intention.

As yet another person is murdered by ICE, and the Trump Government lie about it, attempting to justify extreme violence towards an ordinary person like you and me, calling the individual a domestic terrorist (again) as part of their plan to remove opposition or dissenting voices through intimidation, arrest and execution.

It is the total lack of remorse, accountability or integrity that is displayed. These people are who they show themselves to be, as much as some wish to pretend otherwise, they are fascists and they won’t stop grabbing power and wealth until they are ended and it won’t be by “democratic means”.

Here in the UK, thankfully we don’t have anything like the same level of weapons or guns, but remember the Reform leader and his candidates invariably support Trump or Putin in their authoritarian approach. They don’t condemn heinous crimes by them, in fact they want their own version, they want to copy it and they push false narratives about anyone not white. If anything, their push for Brexit and independence has made us more vulnerable and isolated.

I understand why poor people might feel unheard, disrespected, ignored and don’t seem to have many prospects in life, want change – but they are being lied to, that this has anything to do with skin colour or religion or people fleeing war, starvation and persecution. How things appear often isn’t how they actually are. It is the structure of society and the truly wealthy and multinational companies not contributing a fair share to the social pot. The marches and the flags are attempts to be seen, but are also designed to intimidate and threaten. This is deeply wrong and racist and not what Britain is. Our flag should be something to gather around in celebration of what we are today, not stolen by white nationalists trying to tell us what we are not. Epsom take note.

Those who are ‘well off’ (our clients) have money and financial security, with connections and a sense of place in society. Many of you pay a lot in tax, some of which I would agree is desperately unfair. However, as noted in Spotlight, tax rates are actually lower than they were 40 years ago. Our top rate of tax is 45%.

None of us like to see our money wasted, yes it is easy to spend other people’s money, yes you are not thanked properly, yes we have to acknowledge that you need to look after your own, the tax system isn’t good, it’s far from simple and far from perfect, I know that very well, but it’s that which needs to change, not simply to cut away from those who need our support so that we can have a thriving and just society.

We need entrepreneurs who create jobs and wealth and are encouraged to do so, but this should not be at the expense of people. Nobody needs a billion, nobody. Those who feel hard done by that make a lot of noise in the media really should reassess their good fortune. We also need artists, poets, carers, thinkers, therapists, medics, engineers, designers and community leaders to inspire us to better. We need proper investigative journalists to bring corruption to light and the law to act justly. We need each other – wasn’t that the learned message from the pandemic?

You know that London isn’t a war zone, that actually it’s a thriving city, in fact you prosper as it does. The only shame I feel about London is the fact that we have homeless people. They need help. We are told that we pay tax to support lazy people, yet it’s these people (people like me and you) who can largely select our hours of work for a good income. Yet the irony is that these beliefs and arguments are very reductive lazy thinking. Granted, we may have worked hard, but we had opportunities, tools, sufficient encouragement, health and even the setbacks were things we could overcome, we don’t work 2 or 3 jobs with vile employers just to be able to feed ourselves. We have not lost any rights or advantages other than those reduced by Brexit.

Racism isn’t always deliberate or obvious, it’s born through the gradual acceptance and accumulation of bad data. We all have unconscious biases and fears. It is the continual work of character formation that helps understand ourselves and change. Often we need confronting about what we presume. It doesn’t help when we are fed easy answers to difficult problems, (who doesn’t want easy solutions!) by people who have no intention of understanding, but merely regurgitating their own badly formed opinions.

Racists eventually hate any minority in any form because they are afraid of difference. Just because Reform has some women and some non-whites in view, does not mean that they want this, as ever, it’s a means to an end (power) and if once established, you will see the same regressive policies as in the US…(yes Donald Trump does the window dressing with plastic women, he’s a salesman) which at best is a gradual removal of economic and social independence, dismantling democracy, but ends with no jobs for women, increasingly reducing their freedoms (no say, no vote, no personal property) and of course removal of anyone who isn’t on board with the white replacement nonsense. This is deceitfully packaged at true patriotism, or traditional values or even ‘Christian’. This is what far right is. Any male with a mother, sister, aunt, wife, daughter, niece or female friend should think very carefully.

There will inevitably come a point where I won’t be able to see the good in those whose default position is to defend the indefensible racist garbage, where people are viewed as non-people.

These are dreadful individuals, vile – yes that’s Trump, Farage, Musk, Theil, Fox and those that platform them and their inner circle. They don’t care about society and certainly don’t care about you and me.

There is a heap of evidence about all this, it is deeply concerning and pretending that it’s not the same here is naive – look at the way American democracy is being rapidly destroyed, listen to Mark Carney. As he said in Davos:

“We know the old order is not coming back. We shouldn’t mourn it. Nostalgia is not a strategy, but we believe that from the fracture, we can build something bigger, better, stronger, more just. This is the task of the middle powers, the countries that have the most to lose from a world of fortresses and most to gain from genuine cooperation.”

Of course, Trump attempted to chastise Carney in his own ‘speech’, but as ever, he can barely string a few words together coherently. As Greenpeace say, if you are not part of the solution, you are part of the problem. Hating is never a solution and we have a diverse group of clients who we like and serve.

Carney video: https://youtu.be/JnE2HTfDivQ?si=dz7qygn4Dfmims0W

References:

Davos – World Forum: https://www.weforum.org/meetings/world-economic-forum-annual-meeting-2026/

ICE Murders and detentions: https://www.americanimmigrationcouncil.org/blog/ice-deaths-shootings-2026/

Bloomberg Billionaires Index: https://www.bloomberg.com/billionaires/

Truth about Asylum: https://www.refugeecouncil.org.uk/stay-informed/explainers/the-truth-about-asylum/

Myths about Refugees: https://www.rescue.org/uk/article/11-myths-and-misconceptions-about-refugees-debunked

Refugee Action: https://www.refugee-action.org.uk/about/facts-about-refugees/

UK Official statistics about asylum: https://commonslibrary.parliament.uk/research-briefings/sn01403/

Mark Carney, Prime Minister of Canada: https://www.pm.gc.ca/en/about

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Was this the biggest moment of the year?Jemima Thomas2026-05-03T22:04:07+01:00

Would you leave the country if there was a 95% tax?

Dominic Thomas
March 2026 • 2 min read

Would You Leave the Country if there was a 95% tax?

I was at an investment conference the other week and a well-known speaker asked the audience of financial advisers to raise a hand if they would leave the country if there was a 95% tax. A lot of hands went up. So presumably, many of them would. Good news for me, an audience that easily self-identifies.

A thoughtful adviser might have paused to wonder, “95% of what?” a better adviser may have thought “at what level of income or assets would the 95% tax rate apply?” an even better adviser may have wondered what was being exchanged or traded for the 95% tax? surely each person should have thought, “leave the UK for where?”. All this really reveals is our biases and inability to think critically – something that I believe is important when helping you plan your future.

Today we live in a knee-jerk-response-driven culture. It’s been brewing for years, from poorly framed questions at sports finals like “how do you feel?” to makeover shows with a big reveal. Reaction is the stimulant and is being increasingly weaponised. Pose a question to a MAGA supporter and watch them implode.

I saw a headline recently that effectively said the King was pocketing millions from unclaimed estates. Naturally, the headline was designed to prompt a reaction.

To clarify – if you die without a Will and with no obvious family to benefit, your estate tax will be effectively 100% (as it all goes to HMRC). That’s right a tax bill of 100%. At least, that’s the way I imagine it would be posed.

Technically what happens to an unclaimed estate is that it reverts to ‘the Crown’ after 30 years of remaining unclaimed. This has an appropriate Latin term – bona vacantia, which has nothing to do with U2 going on holiday but means “ownerless assets”.

Naturally there is a Government department that manages the process of Bona Vacantia … creatively named the Bona Vacantia Department or BVD.

According to the BVD, there are currently (January 2026) around 5,500 unclaimed estates, nearly a third of them in London and Surrey. You would imagine therefore that the estate of anyone who died prior to 1996 would now have reverted to the Crown, in fact there are a few (currently just 18) that remain on “the list”. The current oldest being the estate of William Baker of Eastbourne, Sussex, who died in June 1974. There are 188 estates that in theory are due to revert to the Crown this year (deaths in 1996).

The BVD handle around 30,000 company and estate cases each year, with a further 60,000 or so low value estates handled digitally. This all generates income for the Treasury (about £71m in 2025).

“The List” which is regularly updated can be found online at the BVD, here is the link for you to check if there is an estate that you may be connected to:

https://www.gov.uk/government/statistical-data-sets/unclaimed-estates-list

There was around £4m in 2024/25 of payments to entitled kin.

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Would you leave the country if there was a 95% tax?Jemima Thomas2026-03-09T09:10:38+00:00

What surprise twist will inheritance tax throw your way?

Dominic Thomas
Oct 2024 • 3 min read

What surprise twist will inheritance tax throw your way?

The new tax year of April 2027 will likely bring in significant changes for the Executors and beneficiaries of estates. Unless plans change (which is a possibility) most people will likely see their estate pay even more inheritance tax.

Why? Well primarily because any unspent pensions will form part of the estate for assessment (they are currently exempt). As someone on social media far too often, I come across a number of posts and videos about this “draconian” tax and what you can do about it. Most of them are selling something and many of them are misleading.

There are other restrictions that are due to begin at the same time, but in this item, I am going to focus solely on your pension.

First, this only applies to investment-based pensions, not the big employer final salary or career average schemes (such as the NHS, Teachers, Local Government, Armed Forces). Whilst your statement from these institutions often shows a value, it’s irrelevant for anything other than a divorce.

As a result, those of you (most people) who have an investment-based pension, this will become part of your estate. Remember that there is no inheritance tax between spouses, this is only when a single or divorced person dies or the last member of a couple.

Pensions are designed to provide retirement income and therefore to be used. However, due to the way the tax system works, for many clients we may have structured income from a variety of sources, such as ISAs or cash and there may well be a reasonable amount of your official pension pot left (because you saved wisely and it was invested well).

You can get around this issue by going ‘old school’ and buying an annuity with your pension, which provides a guaranteed taxable income for life at prevailing income tax rates (0%-45% on all the income). The problem being that this is an irreversible decision and you are stuck with it, irrespective of future income tax rates and your actual need for income.

You could spend more, take out lump sums rather than just income, you can gift this money too. You decide who the beneficiaries are – which can be anyone or any registered charity.

However, a word of caution, your income requirement in a decades-long retirement (hopefully) will change and as you age, you will likely need less income for a period before possibly needing an awful lot more if you need care in your home or if you go into residential care, which as you may know, can be very expensive (£600-£3,500 a week). Let me put that in annual terms – £31,200-£182,000 a year. So it’s quite possible that you will spend a lot of your pension – perhaps all of it.

My advice is to have a proper financial plan and review it regularly. It’s not simply something for those planning retirement or the sale of their business; but for millions of retirees who rely on pensions and savings to get them through each month. Certainly, don’t panic about a tax that you don’t have to pay (your estate might, you won’t). There is a lot that can happen in the retirement years, and I will be encouraging you to maximise your enjoyment and fulfilment of the lifetime you have.

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What surprise twist will inheritance tax throw your way?Jemima Thomas2025-10-03T16:15:57+01:00

Death of inheritance tax?

Dominic Thomas
Oct 2023 • 5 min read

Death of inheritance tax?

There are a number of elections around the world – the pontifications, point-scoring, own goals and blotted copybooks are all about to garner increased scrutiny. Whispers of good news into ears in attempts to win over voters. The next UK election has to be held by 28^th January 2025 and we all tend to suspect that the current bunch will continue to attempt to restore a modicum of decency and sound policy before announcing one.

The rumours of the death of inheritance tax appear to have gained some traction, this is of course all largely leaked hearsay, or in other words think tank testing popular opinion. The conundrum of taxes is simply that we all know that they are needed, but few of us can see that the money is used wisely. Some of our fellow humans seem to enjoy paying tax, able to clearly see the collective value in how, what and why it is deployed. Here in the UK, we may get a standardised pie chart of where it went, but the numbers are invariably so vast that they have very little connection with us.

Inheritance tax is one of the most loathed taxes. This is probably because most of us (the middle classes) have earned income, which has already been taxed. Savings or investments, entrepreneurial or retail have had taxes applied, albeit with some allowances granted. IHT is a bit like being given a tax bill again, once you have done all the sensible things and have something left to leave your family or beneficiaries.

A tax rate of 40% also seems fairly high (by tax rate standards) much higher than capital gains taxes and higher than most people pay as income tax. It was seven Chancellors ago when a certain George Osborne who last messed around with IHT, adding an allowance for those who had a home and children to inherit it. The Main Residence Relief was ushered into existence from 6^th April 2017, now granting an extra £175,000 of exemption (in addition to the £325,000 nil rate band that everyone gets). It would be too easy to have simply increased the latter to £500,000, instead, this is the making of the Humphrey Appleby’s where what you appear to have can be withdrawn in the wrong or right circumstances, depending how you count and what you count.

So the latest whispers of the abolition of inheritance tax, garner a keen ear and of course the intention is that those convert into votes. Taxes as bribes? It was ever thus. IHT has been raising substantial sums for HMRC over the years and each year the sums tend to increase. The latest data April to August 2023 showed IHT receipts of £3.2bn, up £0.3bn. In the tax year ending 2022-23 £7.1bn of the total £786.69bn HMRC received from all sources. I make that about 1% in round numbers.

Combined with this potential good news is a classic ‘Humphreyism’ in that the current inheritance tax exemption on pension funds may be … well, challenged. There already are possible taxes, depending on how conveniently you can arrange your death before age 75 or how the money is taken. However, this appears to be within the range of the ministry of misinformation and may well be that classic case of rearranging the deckchairs on the Titanic.

We will keep you posted with facts as they arise, assuming they are clearly disclosed by Humphrey and his chums.

For the record:

Osborne, Hammond, Javid, Sunak, Zahawi, Kwarteng, Hunt.

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Death of inheritance tax?Jemima Thomas2025-10-06T12:15:12+01:00

Giving and Inheritance Tax 2021/22

Dominic Thomas
March 2022 • 4 min read

Giving and Inheritance Tax

Part of your tax year end planning may involve making some gifts that help reduce the value of your estate with the knock-on effect of reducing inheritance tax (hopefully a long time in the future though… right?!).

Anyway, the uncertainty that Capital Gains Tax faced last year was mirrored by IHT (inheritance tax). That too had been subject to a review by the OTS (Office of Tax Simplification … yes it does sound like something from a Peter Sellers sketch) commissioned in January 2018, which had seemingly got lost in the Chancellor’s in-tray. Thankfully, after nearly four years, the end of November 2021 saw a statement confirming that there would be only one administrative change to IHT (first announced in March 2021), easing the paperwork burden for many executors. IHT year end planning is, thus, also business as usual, meaning that you should consider using the three main IHT annual exemptions:

The annual exemption

Each tax year you can give away £3,000 free of IHT. If you did not use all the exemption in 2020/21, you can carry forward the unused element to this year (and no further), but it can only be used after you have used the current tax year’s exemption. For example, if you made no gifts in 2020/21, and you gift £4,000 in 2021/22, you will be treated as having used your full 2021/22 exemption and £1,000 from the previous tax year.

The small gifts exemption

You can give up to £250 outright per tax year free of IHT to as many people as you wish, so long as they do not receive any part of the £3,000 exemption.

The normal expenditure exemption

The normal expenditure exemption is potentially the most valuable of the yearly IHT exemptions and one which the OTS wanted to replace. Under the exemption, any gift – regardless of size – escapes IHT provided that:

you make it regularly;
it is made from your income (including ISA income, but excluding investment bond and other capital withdrawals); and
the sum gifted does not reduce your standard of living.

This last exemption is not easy to prove. It would help your Executors and therefore your beneficiaries if you follow our guidance and requests to update your income and spending each year. Honestly, we don’t do these things to simply get you to complete forms – there is a logic and it’s all for your benefit (we do appreciate that it is a pain!). You can do this using our spending plan or simply update the information on the portal. If I have worked on your plan recently, the figures there also need to be checked. Basically we need to evidence your spending – or rather your executors will.

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Giving and Inheritance Tax 2021/22Dominic2025-10-06T12:04:26+01:00

Inheritance tax is easy money for HMRC

Dominic Thomas
Jan 2022 • 1 min read

Inheritance tax is easy money for HMRC

Few weekends go by without one of the main newspapers doing a story on inheritance tax. I imagine that is because inheritance tax is often cited as the most loathed tax. The general view being that Government gets taxes whilst you are alive and the final indignity is to take more upon death. A 2015 YouGov report indicated its unpopularity.

If you have been reading any of my blogs over the years, you will know that I am rather sceptical of surveys and their results being understood to represent an entire population. The survey in question had a sample size of 1,975 adults. Not enormous out of a population of 66million. There are all sorts of problems with sampling data – but I digress, it is from my anecdotal experience of 3 decades, unpopular.

In March, the Office for Budget Responsibility (OBR) projected 15% growth in inheritance tax (IHT) receipts from £5.2bn in 2020/21 to £6bn for 2021/22. They projected this sum to rise to £7.1bn in IHT receipts in 2024/25, after allowing for indexation of the bands which had been due to start in April 2021.

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Inheritance tax is easy money for HMRCDominic2025-10-06T12:06:09+01:00

Is inheritance tax avoidable?

Dominic Thomas
Feb 2019 • 3 min read

Is inheritance tax avoidable?

News this week that the taxman is set to take a record amount of inheritance tax for 2018/19 is perhaps not too much of a surprise. Most years the amount of inheritance tax paid rises. Arguably the least popular tax – sometimes called death duties, this is the tax that applies once you die to your worldly wealth.

It is generally the case that if you are married, it is only paid once the both husband and wife have died. This final day of reckoning, tax-wise generated £4.5billion in the first 10 months of 2018/19. A new record high.

It is surprising that despite complaining about the tax, most people do little about it. IHT is one of the few taxes that is avoidable by arranging your affairs sensibly in advance.

5 QUICK TIPS

1. Consider taking out an insurance policy to pay the bill. Admittedly this has a cost and does not remove the bill, but it does enable your real wealth to be passed on to those you want to receive it, rather than the Chancellor. A simple joint-life second death policy placed into Trust will suffice.

2. Have a Will and review it. This will ensure that your estate is passed to the right beneficiaries and you may also nominate charities. Gifts to charities are exempt from any inheritance tax.

3. Know your limit. Everyone has a limit known as the nil rate band. This is the first £325,000 of an estate – the net value (assets less liabilities). If you have a property this can be increased (complicated but it will increase). Couples double up on these. You can find more detail within out FREE app about this.

4. Consider using IHT exempt investments, this is really not for everyone, but is certainly a possibility. The most basic being business owners have certain exemptions – technically known as BPR, as does owning woodland or some aspects of farming. You can also hold some AIM listed shares which will be exempt – but be warned all these options have pro’s and con’s.

5. Spend money from the right places. Under pension reforms, it is possible to pass on the balance of a pension fund free of inheritance tax. So if you have the option, you may wish to use up other investments that will be subject to IHT first. Context is everything and thought needs to be given to this from an income tax angle and investment approach.

There are other options too, so if you would like to discuss how you can reduce inheritance tax please get in touch. However, if you are married and have a net estate worth less than about £1million you probably wont have any inheritance tax.

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Is inheritance tax avoidable?Dominic2026-02-09T13:55:26+00:00

Inheritance Tax Update

Dominic Thomas
Sept 2018 • 4 min read

Inheritance Tax Update

Inheritance tax has sometimes been described as a voluntary tax. This may ruffle your feathers a little, but is of course true in principle. That is to say that you can plan for inheritance tax. You do so by arranging your affairs in such a way that you either pay minimal tax, none or ensure that you have resources aside to make no significant difference. Despite this between April 2018 and the end of the summer (August 2018) a whopping £2.357bn was paid to the Treasury in the form of inheritance tax. This is almost as much as was collected in the whole of 2010-11.

The Office of Tax Simplification has completed (8 June) a survey of the review of inheritance tax. This is currently being contemplated. The last Chancellor introduced a more complicated way to increase the inheritance tax allowance. What appeared reasonably generous, was actually conditional. The extra benefit, under certain condition could be lost. Those that remember “Yes Minister” might smile at the notion of the OTS asking how to do their job. That is to say, the Office of Tax Simplifcation, asking “how do we simplify IHT?”. For starters, do what you are meant to do and make it simple. The debate about whether IHT is “moral” or “political” is probably a secondary issue to it being at least “simple” which currently… it is not.

Asking the Questions…

The survey poses more questions, which largely seem to be concerned with record keeping rather than adjusting the rate or rules. However as only around 5% of estates pay IHT, perhaps the issue is one that most people are not as bothered by as the news outlets suggest. However, the survey makes an interesting read, highlighting all the current “issues”. See the survey here.

You may have noticed that I wrote a series of pieces on inheritance tax, three years ago how gifts are recorded and the forms that you could even download and prepare for your beneficiaries. You can find these here.

What if you had died yesterday?

Where are you originally from?

Marriage is not an IHT exemption

How does HMRC know about gifts?

As safe as houses

Paying inheritance tax when someone dies is not always straight-forward. The term “estate” is perhaps misused, it should really mean “death” and when one person in a marriage dies, there is no inheritance tax by default.

The amount of IHT collected continues to rise each year. Consider each of these tax years.

2010-11 £2,724m

2011-12 £2,917m

2012-13 £3,147m

2013-14 £3,417m

2014-15 £3,825m

2015-16 £4,673m

2016-17 £4,840m

2017-18 £5,228m

Folks, it doesn’t have to be this way… you have the power to plan for the certainty of death

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Inheritance Tax UpdateDominic2025-10-06T12:11:51+01:00

Inheritance Tax and BPR

Dominic Thomas
Nov 2015 • 4 min read

Inheritance Tax and BRR

You will recall that I have been blogging about various HMRC inheritance tax forms, and last week I also discussed Power of Attorney and the Court of Protection. Today I am high-lighting some planning opportunities that address these issues in a practical way using BPR – or Business Property Relief.

Inheritance Tax (IHT) is the second most resented tax in the UK. IHT is currently payable at the rate of 40% on an individual’s estate which exceeds the ‘nil rate band’, currently £325,000. Estates which comprise a family home and few other assets can incur a large tax liability. There are many options available to those who wish to mitigate their estate’s IHT liability. Trusts and gifting are the most common strategies employed, but both take 7 years in order to be fully effective. For clients who are elderly or unwell, this is often too long a timeframe.

Business Relief, or Business Property Relief (BPR) as it is commonly known, is a UK IHT relief that was introduced by the Government nearly 40 years ago (7 April 1976). It was designed to allow business owners to pass on businesses to beneficiaries without incurring an IHT liability. In 1996, it was made more widely available to private investors and now allows any qualifying investment held for at least two years, and at the time of death, to benefit from 100% IHT shelter. Most unquoted, UK registered companies will qualify for this relief. This two year timeframe makes this form of planning the quickest way of sheltering assets from IHT.

BPR and Power of Attorney

Another area when BPR could be of use is when Power of Attorney (POA) is in place. Take a look at this example.

Mrs Jones is 70. Her son has Power of Attorney (POA) over her financial affairs and due to her poor health, he can make financial decisions on her behalf. Gifting and trust planning may not be possible in this case, because a number of restrictions exist to avoid attorneys abusing their positions. One of the main rules states that attorneys cannot give away access to a donor’s (Mrs Jones) funds, without applying to the Court of Protection for approval. Trust work and gifting both involve a change of ownership and it would be difficult for Mrs Jones’ son to successfully put either in place. It may also be unsuitable given the 7 year timeframe and Mrs Jones’ health status.

Mrs Jones’ son could, however, invest in a BPR qualifying company/a portfolio of companies on her behalf. Since the investment remains in her name, he has not changed the ownership for the funds and since a BPR investment only requires 2 years to become effective for IHT purposes, it may be the most suitable option.

Unquoted companies are usually riskier than those listed on a major stock exchange. Whilst there are a number of risks associated with investing in unquoted companies, many investment companies offer BPR investments that target capital preservation. These investments involve companies with long-term, index-linked and stable cash flows.

Want to know more? just get in touch.

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Inheritance Tax and BPRDominic2026-03-16T12:34:20+00:00

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