Global stock markets looked to have bounced back from a torrid February and March, but yesterday’s sharp drop in the FTSE 100 warned investors there could be more turbulence to come. But it’s not all bad. There are ways you can use falling markets to your advantage when it comes to financial planning.
When my father died recently, I was due to inherit some of his estate. However, my brother and I, as joint executors, have agreed to enact deeds of variation so that investment holdings can be passed directly to our children.
Anyone who has recently inherited shares may be entitled to a refund on previously paid inheritance tax (IHT) due to the recent stock market falls, according to private client law firm Wilsons.
IHT is calculated on the value of assets on the date of the deceased passing, with the tax due to be paid six months from that date. Therefore, any shares inherited before the recent market crash will have incurred a tax bill reflecting what were historically high prices for shares.
I read with interest the Essential Guide to Inheritance Tax by Ceri Jones, as I have been looking into IHT planning. A point that was not mentioned was the 14-year rule, which I stumbled across in my research and might have been worth mentioning in the section about setting up a trust.
Barrie Culley, by email
One of HM Revenue & Customs’ favourite sayings at this time of year is that “tax doesn’t have to be taxing”, but with the UK tax code 10 times longer than the complete works of Shakespeare, there are countless tricks and traps to navigate.
1) Capital gains tax on main residence
A common misconception is that the sale of your main home is exempt from capital gains tax (CGT), but this is not always the case.
The House of Lords is considering a change to the law which would exempt siblings who live together from paying inheritance tax (IHT) on property left to each other.
A bill introduced by Conservative peer Lord Lexden has called for the change in the law.
Inheritance tax (IHT) is widely disliked as a double levy on assets built up from taxed income over a lifetime of work.
In fact only 4-5% of UK estates currently pay it. However, as the baby boomer generation dies, leaving homes that have soared in value, many more families will be caught. IHT receipts could rise by a third, from £5.2 billion in 2017 to £6.9 billion in 2024, according to the Office of Budget Responsibility.
The UK’s inheritance tax (IHT) rate is more than double the European Union’s average, according to analysis by UHY International, an international accountancy network.
The report looked at how much an individual passing on a estate worth £2.4 million would pay around the world.
A diagnosis of dementia, in whatever form it might take, is a tough time for any family, one full of uncertainty about the future. However, the financial aspects are one area where you can take back control and reduce stress levels by planning ahead.
In these times of momentous political upheaval, old certainties suddenly look less sure. Just ask Christian Schultz, chief UK economist at Citibank, and Oliver Harvey, head of Brexit research and UK macro strategy at Deutsche Bank.
The duo made headlines in September with pronouncements that a Jeremy Corbyn-led Labour government could actually be a safe option for the UK – safer than a no-deal Brexit for sure, and maybe even safer than a Conservative government led by a fiscally profligate Boris Johnson.