Inheritance Tax (IHT) is affecting more and more people.

In the tax year 2016/17 HMRC collected £4.95 billion. That figure is up by circa £300 million from the previous tax year’s IHT total of £4.65 billion!

What’s puzzling is that there are ways to mitigate IHT that use UK Government legislation and are not considered to be aggressive avoidance of IHT. Furthermore, some strategies offering this tax break invest in opportunities which can actually help make a significant difference to the growth of the UK economy. One example is property development finance enabling developers to build the much needed housing that the UK requires.


Reduce your client’s taxable estate!


Firstly, your clients could spend their money on things with no intrinsic value, for example, going on that holiday that they’ve always promised themselves. Additionally, your clients may wish to give some of their money away to those most dear to them and/or charities that are close to their heart.

Should they choose to give 10% of their estate to charity, they will only pay IHT at a rate of 36% rather than 40%. That’s still a lot of tax/money to pay, in my opinion. Alternatively, your clients could put some of their money into trust for their chosen beneficiaries and, like gifting money away, if your clients survive seven years from doing so, those monies will pass on free of IHT.

The main issue with gifting and trusts is that clients lose access to and/or control of that money, not to mention that trusts can be both complicated and expensive to set up. And what if your clients need that money in the future – say, for care home fees? Do your clients really want to ask their beneficiaries to pay for and therefore probably choose which care home they can go into? No, I wouldn’t want to be in that position either!

Alternatively, wouldn’t they rather invest their money in such a way as to stay in control of that money? So that they can be in charge of making that decision for themselves; retain full access to those funds; and have the added benefit of knowing that it is exempt from IHT two years on from the money being invested and as long as they are holding it at the time of death.


‘Sounds like a good idea,’ I hear you say. But what if your clients don’t want to wait two years? Well, there’s good news. Your clients could shelter their estate from IHT from the day of investment with the Adapt IHT Protected Portfolios, giving your clients’ chosen beneficiaries immediate protection from the impact of IHT, with your clients retaining full access to their money.

The Adapt IHT Protected Portfolios are a Business Relief (BR) qualifying investment with the added protection of life cover (*). This means that your clients can invest up to £250,000 with the peace of mind that should they pass away within two years of their investment having been allotted, Blackfinch will pay the £100, 000 (40% of £250,000) IHT bill that their beneficiaries would otherwise have faced.

Hopefully though, your clients will still be enjoying life and thus on the second anniversary of when their investment was allotted, at which point it should qualify for IHT exemption when they do die.



For more information on the Adapt IHT Protected Portfolios please click here

To download this article please click here

* The policy is designed to mitigate the effect of IHT for the first two years before IHT relief begins, for those under the age of 85 (from the date monies are allotted), and for investments of up to £250,000. It covers 40% on the original gross investment (which would be payable to HMRC) upon death within the first two years, subject to conditions. It is an option and is subject to higher fees as set out in the product literature.

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