Inheritance tax and care planning for this generation and the next

For many people, inheritance tax would be considered one of the least ‘loved’ taxes.

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Luke West
Published: 09 May 2018 Updated: 13 Jun 2022

For many people, inheritance tax would be considered one of the least ‘loved’ taxes. Furthermore, with the over-50s owning an estimated 75 per cent of the nation’s housing wealth*, it is more important than ever for families to consider future inheritance tax implications.

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The government can change the tax rules at every budget and it can be difficult to determine how to best protect your family’s inheritance.

The government may demand a slice of anything valued over £325,000. For many, this could result in a substantial inheritance tax bill.

The strategy will be different for each family, due to their unique circumstances and views on life. Nonetheless, the best advice is to plan early. Tax planning options are becoming ever more restricted and additional disclosure requirements were introduced in April 2018 to prevent unacceptable inheritance tax avoidance. However, sensible preparation and making legitimate use of specific reliefs for certain assets is perfectly valid. For example, trading businesses, agricultural property or woodlands could benefit from inheritance tax relief.

Where there is substantial wealth, it may be better to ensure that children and grandchildren benefit during your lifetime. Trusts and Family Investment Companies are still particularly relevant in these scenarios: they offer the ability to transfer assets to the younger generation, whilst keeping control of those assets until the next generation is ready for the responsibility.

Healthier living and better access to medical care mean many are enjoying longer and more active lives. Increasingly, clients are also asking us not just about the complexities of protecting their wealth, but coping with the escalating costs of later life care. With so much uncertainty surrounding these issues, it is important to have the right practical advice, whether it’s navigating the complex and sometimes daunting issues of care costs or choosing the right care home.

While the themes may be similar, each case is unique. By spending a little time looking at your own situation with a tax adviser, you can help to keep significant assets in your family.

*Source – Getty/Savills research, April 2018

By necessity, this briefing can only provide a short overview and it is essential to seek professional advice before applying the contents of this article. This briefing does not constitute advice nor a recommendation relating to the acquisition or disposal of investments. No responsibility can be taken for any loss arising from action taken or refrained from on the basis of this publication. Details correct at time of writing.


This article was previously published on Smith & Williamson prior to the launch of Evelyn Partners.