Inheritance Tax - Lonsdale Services · residence nil rate band. If Melanie’s estate is to be split between her children James and Susan she would have the following nil rate bands

www.lonsdaleservices.co.uk 1

Inheritance Tax

An introductory guide

2 Lonsdale Services Limited

People generally find speaking about money difficult. Every family is different and it is a difficult decision to know when it’s the right time to involve your older children in financial planning. We have found when clients took our advice and spoke to children it can help the family formulate a cohesive financial plan to benefit everyone. Our clients often tell us how grateful they are for encouraging them to discuss their finances openly, and they feel a sense of relief that everyone knows and understands their financial priorities. Neil HomerFinancial Adviser Lonsdale Services

3 Introduction

3 Howourfinancialadvisersassistyouwithestateplanning

3 EstatePlanningChecklist

4 WhatisInheritanceTaxandwhenisitpaid?

5 Howtodeterminewhatisincludedandwhatisconsidered

outsideyourestatewhencalculatingIHT

6 HowmuchisyourNilRateBand?

8 Lifetimegifts

10 CalculatingtheIHTdueondeath

11 PayingtheInheritanceTax

12 Case Study – Gifting to Grandchildren

Contents


Introduction

This introductory guide to Inheritance Tax (IHT) and estate planning provides a basic understanding of when IHT might be chargeable on an estate and lifetime gifts. It also reviews how any subsequent tax liability may be calculated.

DuringthenextthirtyyearstheUnitedKingdom

willexperiencealargetransferofwealthbetween

generations.Withtheriseinpropertypricesand

investmentvalues,morefamiliesfindthemselveswith

estateswhicharepotentiallyliabletoInheritanceTax.

Oneofourmainrolesasindependentfinancialadvisersis

toassistclientswiththeirestateplanningandencourage

clientstoconsiderfinancialplanningonafamily-wide

basis.Ourclientswanttopassonaccumulatedwealthto

thenextgenerationsotheirbeneficiariesinheritasmuch

oftheirestateaspossible.

Weworkcloselywithclientsandifnecessarytheirother

professionaladviserstoensurefinancial,legalandtax

planningisalljoinedup.WeuseaLifetimeFinancial

Planningtooltoensureourclientshaveenoughmoney

toliveonfortherestoftheirlife.Lifetimefinancial

planningshowsclientshowdifferentchoicesaffecttheir

inheritancetax.

Wereviewyourpersonalassets–yourhome,

investments,savingsandotherpossessionstocheckifyou

willbeliabletopayinheritancetax,wethenofferyoua

taxefficientsolutionthrougheffectiveestateplanning.

Estate Planning Checklist

Haveyouwrittenawill?

Isyourcurrentwilluptodate–hasittakenintoaccountyourbeneficiaries’circumstances?

Doyouhavehealthcareproxiesandlastingpowersofattorneyinplace?

Haveyouabusinesslastingpowerofattorneyinplace?

Whoareyourestatebeneficiaries?

Haveyouvaluedyourfinancialassets?

Wouldyouconsidergivinggiftsinyourlifetime?

Doyouhavesurplusincome?

Doyouneedfurthergrowthonyourassetsinsideyourestate?

Couldyouaffordtogiveupaccesstosomeofyourcapital?

Doyourequireawholeoflifeinsurancepolicy?

How our financial advisers assist you with estate planning


InheritanceTaxisataxthatmaybepayableonyour

‘estate’whenyoudie.Itcanalsoapplytocertaingifts

madeduringyourlifetime.IngeneralIHTwillbedueif

thevalueofyourestateondeathisgreaterthanyour‘nil

rateband’.

What is the nil-rate band?Thenilrate-bandisthevalueofanestatethatisnot

subjecttoInheritanceTaxintheUnitedKingdom.

Thestandardnilratebandfor2018/19 is £325,000,

althoughtheamountavailabletoyoucouldbedifferent

dependingonindividualcircumstances.Ifthevalueofyour

estateondeathisgreaterthanyournilratebandyouwill

beliableforIHT,theexcessisgenerallytaxedat40%.

Residence nil rate band (or additional threshold)Thereisalsoanadditional£125,000ofnilrateband(in

2018/19)whichcanbeclaimedifthefamilyhomepasses

todirectdescendants(children,grandchildrenetc.)on

death.Aswiththemainnilratebandyoucanalsoclaim

anyunusedpartoftheallowancefromyourspouseorcivil

partneriftheydiebeforeyou.

Additionalresidencenilratebandwillbephasedasfollows:

2019/20 – £150,000

(or£300,000formarriedcouples/civilpartners)

2020/21 – £175,000

(or£350,000formarriedcouples/civilpartners)

What is Inheritance Tax and when is it paid?

Case Study ExampleEdwardHillhadahomeworth£525,000when

hedied.Hehadnodirectdescendantssohis

estatecouldnotclaimanyresidencenilrateband.

Thereforehisnilratebandis£325,000.

TheInheritanceTaxwouldbechargedon£200,000

as£525,000-£325,000=£200,000.

IfIHTischargedat40%theamountthatEdwardHill’s

estatewouldoweis40%of£200,000=£80,000.


IfyouareaUKdomicileoradeemedUKdomicileyour

estatefortaxpurposeswillbethevalueofalltheassets

youowneveniftheyareinothercountries,otherwise

justUKassetswouldbetakenintoconsiderationfor

estateplanningpurposes.Forestateplanningthis

includesyourfamilyhome,anyotherproperties,cars,

savings,investmentsandpersonalpossessions.Ifyou

madeanygiftsinthelastsevenyearsbeforeyoudied

thesemayalsoformpartofyourestate.Ifyouowe

anyonemoneyandhaveliabilitiesthesewillbededucted

fromthevalueofyourestate.

Rememberthatpensionsavingsarenotnormallyincluded

aspartofyourestateasyourpensionproviderwillusually

decidewhereanyremainingfundsarepaid,andnotyour

executors.Werecommendyoucompleteanexpressionof

wishesformsoyourproviderknowswhoyouwouldlike

tobenefitfromyourpensiononyourdeath(althoughthis

isn’tbindingonthepensionprovider).

How much of your estate is taxable?TherewillbenoIHToncertainassetsinyourestate.

Theseinclude:

Assetsgiftedtoyourspouseorcivilpartner

Assetsgiftedtocharity

Businessassets,suchassharesinafamilybusiness,or

other‘unlisted’shares,whichyouhaveownedforat

least2years

Agriculturalproperty,suchaslandusedforfarming

andthefarmhousesituatedonthatland.

However,youcanalsoget50%BusinessReliefon:

Sharescontrollingmorethan50%ofthevotingrights

inalistedcompany

Land,buildingsormachineryownedbythedeceased

andusedinabusinesstheywereapartnerinor

controlled

Land,buildingsormachineryusedinthebusinessand

heldinatrustthatithastherighttobenefitfrom

Youcanonlygetreliefifthedeceasedownedthebusiness

orassetforatleast2yearsbeforetheydied.

Afterthesereliefsandexemptionsaredeductedfromyour

estate,theremainingestateoveryour‘nilrateband’is

taxedat40%(or36%ifatleast10%ofthenetestateisleft

tocharity).

How to determine what is included and what is considered outside your estate when calculating IHT


Yournilratebandcanbemadeupofseveralparts:

Your own nil rate bandEachindividualiscurrentlyentitledtoanilrateband

worth£325,000.Thisfigureisforecasttoriseinlinewith

inflationfromApril2021.Ifyoumadegiftswithinthe

sevenyearsbeforeyourdeaththesewillreducethenil

ratebandandtheavailablebalancewillbesetagainst

yourestate.

Transferable nil rate bandIfyourspouseorcivilpartnerdiesbeforeyou,your

executorscanclaimtheunusedpercentageofyour

partner’snilratebandandapplythatpercentagetothe

nilratebandinplaceonyourdeath(currently£325,000).

Thereforeifyourspouselefteverythingtoyouwhenthey

died(meaningtheyusednoneoftheirownnilrateband),

youcouldhaveupto£650,000currentlytosetagainst

yourestatebeforeyoustartpayinginheritancetax.But

moneylefttoothersonfirstdeath,suchaschildrenor

grandchildren,canreducetheamountwhichcanbe

transferredonseconddeath.

How much is your Nil Rate Band?

Case Study ExampleIfAnneJonesthewifeofJohnJonesdiedfirstand

giftedhalfofhernilratebandtotheirchildrenand

everythingelsetoJohnJones,Johnwillbeableto

claimthe‘unused’,50% partofherNilRateBand.

Thereforehisband(atcurrentlevels)wouldbe

£487,500(£325,000 + £162,500).

Residencenilrateband(oradditionalthreshold)

Theadditional£125,000ofnilrateband(in

2018/19)canbeclaimedifthefamilyhomepasses

totheirdirectdescendants(children,grandchildren

etc.)ondeath.Aswiththemainnilratebandyoucan

alsoclaimanyunusedpartoftheallowancefrom

yourspouseorcivilpartneriftheydiebeforeyou.

However,ifyourestateexceeds£2,000,000this

allowancewillstarttobeeroded,andtheadditional

nilratebandwillbetaperedatawithdrawalrateof

£1forevery£2overthethreshold.In2020/21,if

thenetvalueofthedeceased’sestateisgreaterthan

£2.35milliontherewillbenoresidencenilrateband

availableonthefirstdeath.In2020/21thisnumber

willbe£2.7milliononthedeathofthesecond

spouse,aslongastheirownandtheirdeceased

spouse’sresidencenilratebandarebothavailable.


Case Study ExampleNickandMelaniejointlyownedtheirhome.OnNick’s

deathMelanieinheritedhisshareofthefamilyhome

andhiswillalsoleftallhisotherassetstoMelanie.

Nickhadnotusedhisnilratebandof£325,000.

Hisresidencenilratebandhasnotbeenusedasthe

familyhomedidnotpasstodirectdescendants.

MelaniecanclaimbothNick’sunusednilratebandand

residencenilrateband.IfMelanie’sestateistobesplit

betweenherchildrenJamesandSusanshewouldhave

thefollowingnilratebandsin2018/19;

Mainnilrateband£650,000(2x£325,000).

Residencenilrateband£250,000(2x£125,000).

Theresidencenilratebandcanstillbeclaimedifyou

nolongerownpropertyonyourdeathaslongasa

qualifyingpropertywasdisposedofonorafter8

July2015andequivalentassetsarepassingtodirect

descendantsondeath.Thisistoensurethatanyone

thatneedstoselltheirhomeordownsizedoesn’t

loseoutontheirresidencenilratebandentitlement.

SoforexampleifMelaniehadtodownsize,gointoa

residentialcarehome,ormoveintoanursinghome

theresidencenilratebandcouldstillbeclaimedif

equivalentassetsarepassingtodirectdescendantson

herdeath.

Theresidencenilratebandissettoriseto£175,000

by2020/21soeligibleindividualscouldbepayingno

taxonthefirst£500,000(£325,000+£175,000)of

theirassetsin2020/21.Thisrisesto£1m on second

deathin2020/21iftheycanclaimanunusednilrate

bandandresidencenilratebandfromtheirdeceased

spouse/civilpartner.Bothtypesofnilratebandare

expectedtoincreaseinlinewithinflation(CPI)from

April2021onwards.


Lifetime gifts

Anyonewhocanaffordtomakegiftsduringtheirlifetime

cansignificantlyreducetheamountofIHTpayableon

theirestate.Agiftyoumakeduringyourlifetime(unless

anexemptgift)willnotbeincludedinyourestateif

youarestillaliveaftersevenyears.Exemptgiftsare

immediatelyoutsideyourestate.Fourtypesoflifetime

giftexistfortaxpurposes:

Potentially Exempt Transfers (PETs)Themostcommontypeoflifetimegiftisanoutrightgift

toanindividual.Therewillbenoimmediatechargetotax

thevalueofthegiftanditwillbecompletelyfreeofIHT

providedyousurviveitbysevenyears.

Ifyoudiedwithinthesevenyearperiod,thevalueofthe

giftwhenitwasmadebecomeschargeabletotheestate

andisincludedinthevalueofyourestatecalculationto

workouthowmuchIHTisdue.

TodecidewhoactuallypaysIHT,yournilratebandwillbe

allocatedtoyourlifetimegiftsfirst,withanybalanceused

againsttheassetsinyourestateatthedateofdeath.

IfthevalueofyourPETsinthesevenyearspriortoyour

deathislessthanyournilrateband,thennotaxisdueon

them.Butthiswillmeanthatmoreofyourestatewillbe

taxableat40%astheywillhaveuseduppartofyournil

rateband.

IfthevalueofyourPETsinthesevenyearspriortoyour

deathisgreaterthanyournilrateband,therewillbetax

topayonthesegiftsat40%ontheexcess.Thistaxshould

bepaidbythepersontowhomthegiftwasmade.Thetax

billcanbereducedby‘taperrelief’,buttoclaimthisthe

donormusthavesurvivedthegiftbyatleastthreeyears.

Thiswillalsomeanthatthereisnonilratebandleftfor

theestate,andsoitwillallbetaxableat40%.

Chargeable Lifetime Transfers (CLTs)Chargeablelifetimetransfers

aredifferenttoPETsbecause

wheretheyarelargeenough

youcouldhaveanimmediate

taxchargeatthetime

theyaremade.ChargeableLifetime

Transfersaretypicallygiftsintocertaintrusts(interestin

possessiontrustsanddiscretionarytrusts).

IfyoumakeaCLTwhich,whenaddedtoanyother

CLTsmadeintheprevioussevenyears,ismorethan

youravailablenilrateband,(thisdoesnotincludethe

residencenilratebandortheunusedbandofadeceased

spouse),animmediate20% Inheritance Taxchargeis

madeontheexcess.

Case Study ExampleWilliamgifts£400,000intoadiscretionarytrust.He

hasmadenootherCLTspreviously.Therewillbea

20% IHTchargeontheamountovertheavailablenil

rateband.

(£400,000-£325,000)x20% = £15,000 IHT due

bythetrustees.Ifthetrusteespay,therateoftaxis

20%.IfthesettlorpaystheInheritanceTaxinstead

ofthetrustee,thismeanstherewillbeanincreased

lossfromthesettlor’sestate.Theamountoftaxwill

thereforeincrease.

TheremainingtaxationisverysimilartoaPET.

Therewillbenofurthertaxtopayifyousurvivefor

sevenyears.Ifthevalueofthegiftisaddedbackin

toyourestateifyoudiewithinsevenyearsitwillbe

taxedat40%ifinexcessofthenilrateband.

Taperreliefisagainavailabletoreduceanytax

payable.Anytaxpaidat20%whenthegiftwas

madecanbeusedtooffsettaxpayableondeathbut

therecanbenotaxreclaim.


Exempt giftsGiftstoyourspouseorcivilpartnerarefreefromIHT,

asaregiftstocharities.

Youcanalsogiveawayupto£3,000eachtaxyearto

whomeveryouchoosewithoutitcountingtowardsyour

estateifyoudie.Alsoifyouhaven’tusedyourannual

giftingexemptionintheprevioustaxyearyoucangoback

andclaimanextra£3,000fromtheprevioustaxyearas

longasthecurrentyear’sallowanceisusedfirst,allowing

anIHTfreegiftofupto£6,000.

Itisalsopossibletomakeregulargiftsoutofyourincome

whichwillbeimmediatelyoutsideyourestate.Thereisno

limitonthesizeofthegiftaslongasyouhavesufficient

surplusincomefromwhichtomakeit.

Inadditionyoucangiftupto£250toanyoneinanytax

yearaslongasyouhaven’tgiftedanythingelsetothe

sameperson.

Everytaxyearyoucangiveawayweddingorcivil

ceremonygifts.Thiscanbeupto£1,000perperson

or£5,000foryourchildand£2,500foragrandchildor

great-grandchild.

Gifts with reservationIfyoucontinuetobenefitfromanygiftsyoumakethey

willnotbeeffectiveforIHT.Forexample,ifyougaveyour

hometoyourchildrenbutcontinuedtolivethererent

freethiswouldbeagiftwithreservationandthemarket

valueofthepropertywouldremaininyourestate.

Case Study Example (continued)IfWilliamdied4yearsaftermakingthegift,furtherIHTmaybepayable.Assumingthenilratebandatdeath

remains at £325,000.

IHTatthefullrate(£400,000-£325,000)x40% = £30,000butiftheindividualdiesbetween4and5yearsafter

makingthegiftonly60%ofthefullIHTliabilityispayable.

IHTreducedbytaperrelief(£30,000x60%)=£18,000 lessIHTalreadypaid=£15,000(seeexampleabove)

Sotrusteeshaveafurther£3,000topay.(£18,000-£15,000)*

*Pleasenote:Ifyoudiewithin7yearsofmakingatransferintoatrustyourestatewillhavetopayInheritanceTax

atthefullamountof40%.Thisisinsteadofthereducedamountof20%whichispayablewhenthepaymentismade

duringyourlifetime.Inthiscaseyourpersonalrepresentative–whomanagesyourestatewhenyoudie–willhaveto

payafurther20%outofyourestatebasedonthevalueoftheoriginaltransfer.


Ondeaththevalueofyourestateisthetotalofall

yourassetslessyourliabilities.Liabilitiesincludeany

outstandingtaxorloanswhichmustberepaid.Added

tothiswillbeanyPETsorCLTsmadeinthesevenyears

beforedeath.

ThereisnoIHTpayableonanypartofyourestatewhich

ispaidtoyourspouseorcivilpartnerorifyoupayit

tocharity.Businesspropertyreliefcanmeancertain

assetsrelatedtoatradingcompany,suchassharesina

business,arefreeofIHT.Asimilarreliefappliestocertain

agriculturalproperty.

Inheritancetaxischargeableat40%ifthetotalassetsnot

coveredbytheseexemptionsaregreaterthanthenilrate

band(andresidencenilratebandifavailable).Thiswill

includeanytransferablenilratebandorresidencenilrate

bandofadeceasedspouseorcivilpartner.PETsandCLTs

madewithinsevenyearsofdeathwillhavefirstuseofthe

standardnilratebandintheorderinwhichtheyweremade.

Whoisresponsibleforpayingtheinheritancetaxon

yourdeathdependsuponwhatpartoftheestateis

subjecttoIHT:

A failed PET–usesupsomeorallofthenilrateband

availabletotheestate(thusincreasingthetaxpayable

bytheexecutorsontheestate)–ifthePETexceeds

theavailablenilratebandtaxontheexcessamountis

payablebytherecipientofthegift

A failed CLT–taxispayablebythetrusteesofthe

lifetimetrust*.Anytaxpayableat20%whenthegift

wasmadecanbeoffsetagainstthetaxdueondeath

(buttherecanbenoreclaim).

Your estate–taxispayablebyyourexecutors

Please note-TherateofIHTisreducedto36%wheregifts

tocharityexceed10%ofthenetvalueoftheestate.

*Ifyoudiewithin7yearsofmakingatransferintoatrust

yourestatewillhavetopayInheritanceTaxatthefull

amountof40%.Thisisinsteadofthereducedamountof

20%whichispayablewhenthepaymentismadeduring

yourlifetime.Inthiscaseyourpersonalrepresentative-

whomanagesyourestatewhenyoudie–willhavetopay

afurther20%outofyourestatebasedonthevalueofthe

originaltransfer.

Calculating the IHT due on death


Paying the Inheritance Tax

IHTisnormallypayablesixmonthsaftertheendofthe

monthinwhichdeathoccurred.Incertaincircumstances

IHTcanbepaidininstalments.TheGrantofProbate

entitlingyourexecutorstoaccessanddistributeyour

propertycannotbeobtaineduntilafterallIHThas

beenpaid.

Case Study Example – IHT calculationJohndiedinMay2018leavinganestateworth£1,000,000whichallpassedtohischildren.Hisestateincludedthe

familyhomevaluedat£400,000.JohnwasawidowerandhiswifeBettyused50%ofherNRBonherdeathandnone

ofherresidenceNRB.BeforehisdeathJohnmadethefollowinggifts:

May 2005-£100,000eachtosonPeterandtodaughterFelicity=total£200,000;

July 2012-£300,000intoadiscretionarytrust;

June 2013-£100,000todaughterJo.

John’sIHTliabilityis:

John’snilratebandwillbehisownandhalfofBetty’s(£325,000x150%)£487,500.

Hewillhavearesidencenilratebandof(£125,000x2)£250,000.

Histotalnilratebandswillbe£737,500

TheMay 2005giftsarenotincludedwithintheestateastheyweremademorethansevenyearsbeforedeath.

TheJuly 2012 and June 2013giftsarebothwithintheincreasedNRBof£487,500 and use £400,000ofNRB

leavingNRBof£87,500touseagainsttheestate.Plusthereisaresidencenilratebandof£250,000.

Remainingnilratebandsavailabletouseagainsttheestate£87,500+£250,000=£337,500.

Totalestate£1,000,000

Remainingnilrateband(£737,500-£400,000)=£337,500

Taxableestate(£1,000,000-£337,500)=£662,500

IHTpayable:£662,500x40%=£265,000


Lonsdale Wealth Management Case Study

Current Situation

AllanRosshasbeenMr&MrsT’sfinancialadviserfor

fifteenyears.MrTis75andrecentlywidowed.Allan

organisedinheritancetaxplanningforthecoupleformany

years.Thisincludedsettingupa£49,000sumassured

seconddeathwholeoflifepolicyintrust,twodiscounted

gifttrustsnowoutsidetheestateworth£215,000,two

loantrustsworth£80,000.

MrT’soverridingfinancialprioritywastohaveenough

incomeinretirementandtocoveranylong-termcare

needsifnecessary.Hewantedtoundertakeestate

planningtoavoidpayinginheritancetaxondeath.Heisa

basicratetaxpayerwithmonthlyincomeof£2,000and

monthlyexpenditureof£1,500.Hehastotalinvestments

of£535,000andotherassetsworth£200,000.

MrT’shealthisadequate,heisnotconsidereda‘vulnerable

client’butAllanhadtomakehimcomfortableand

understandhisfinancialplanningoptions.

How Allan Ross, IFA Ware, added value with his independent financial advice

Understand the risk profile of your client and their financial objectives

Allandiscussedfuturefinancialcostsopenlyand

recommendedinvestingmorecashtoavoidinheritance

tax.MrThasagoodunderstandingofinvestment

andexperienceofinvestingacrossabroadrangeof

investments.Hehasamediumrisktoleranceanda

mediumcapacityforloss.

Use cash-flow planning tools to explain different scenarios

Allanusedcashflowplanningtoolstoplanfordifferent

eventualitiesandworstcasescenarios.Heexplainedthe

optionsforusingflexibleandtax-efficientinvestment

products.AsMrT’stwograndchildrenareimportant

tohimandhewantedtohelpthemfinanciallyAllan

recommendedleavingalegacyfortheireducationorhelp

themprogressintheircareer.

Allan recommended a Discretionary Trust Option

FollowingthemeetingAllanwasaskedtoresearcha

DiscretionaryTrustoptionandpreparedafinancial

planningreportforMrT’sgrandchildren’sGiftTrust.

Basedonthecash-flowmodelprepared,giftingof£50,000

wouldn’thaveanydetrimentalimpactonMrT’slifestyle,

evenifexpensivelong-termcarecostsarerequired.

Allan recommended Mr T involve his family in his inheritance tax planning decisions.

AllanrecommendedoneofMrT’stwodaughterswas

presentwhenarrangingtheTrustsoMrT’schildren

understoodhowitworks,asMrTmaynotbearoundto

implementit.MrTagreedtomakebothhisdaughters

trusteesalongsidehimself.

Allanworkedonthecasewithhisadministrators,Jo

RossandNatalieRispin.Natalieaddedacruciallayerof

expertiseandknowledgethatishardtoreplicatedealing

withsolicitorsandprobate,aswellasfillingoutformsand

understandingtheirlanguage.

Gifting to Grandchildren – Allan Ross, IFA, Ware


Allan recommended Mr T gift £50,000 in to a discretionary gift trust using a Prudential Offshore Unit Linked Capital Redemption Bond as it:

Providesaccesstotheagreedinvestmentstrategy,and

providespotentialforcapitalgrowth.

Makesuseofreliefsandallowancestominimisetaxpaid

Canbedividedinsegmentsforflexibilityandtax

efficiency.

Allowsthetrusteestocontrolthetaxpointanddefer

encashmentuntilamoretax-efficientpointintime.

Canbeheldunderatrusttoenablethetrusteesto

controlthefundswhilstassistingwithinheritancetax

mitigation.Investmentbondsaretechnicallyclassedas

non-incomeproducinginvestmentsnegatingtheneed

tocompleteregulartaxreturns,reducingtrustees’

administrativeresponsibilities.

Offshorebondsoffertaxplanningflexibility.The

trusteeschoosewhentotakeproceeds,andhow

besttotakethem,eg.whethertoassignsegmentsto

beneficiariespriortoencashment,byconsideringthe

possibletaxcharges.

Underlyingfundsgrowvirtuallyfreeofincomeand

capitalgainstax,providingpotentialforcapitalgrowth

throughgrossroll-upoverthemediumtolong-term.

Onlyexceptionisthewithholdingtaxondividendsthat

variesdependingontheunderlyinginvestmentsofthe

fundschosen.

Investmentshouldbeestablishedoncapital

redemptionbasissothebonddoesn’thaveanylives

assuredsothebonddoesnotendonanybody’sdeath,

offeringinvestmentandtaxplanningflexibility.

The Discretionary Trust from Prudential International was recommended as:

PrudentialInternationalareDublinbasedand

specialistoffshoreinvestmentarmofPrudentialGroup.

PrudentialholdaStandard&Poor’sA+(Stable)Long

termSeniorDebtRating.

Providerwasselectedinaccordancewithinvestment

propositionpreviouslydetailed.Prudentialprovides

excellentservicetoLonsdaleclientsandaccessto

agreedinvestmentstrategy.

Chargingstructureofthisinvestmentiscompetitive

Researchundertakenofthemarketplacehasidentified

thisasbeingthemostsuitablesolutionforMrT’sneeds

andobjectives.

Itispossibletoswitchunderlyingfundsofthis

investmentfreeofcharge.Noredemptionpenalty

appliedonearlyencashment.However,forthegiftinto

trusttobeeffectiveforIHTplanningpurposesMrT

mustn’tbeabletobenefitfromthetrust(orcausesgift

withreservationissues).

Thetrustees,ofwhichMrTisone,cancontrolwhen

thegrandchildrenreceivemoney.Thiscanoften

beachievedinataxeffectivemanner,byassigning

segmentstothebeneficiariesbeforeencashment.

LonsdaleServicesLimitedisauthorisedandregulatedbytheFinancialConductAuthority.Membership:225488.

FinancialConductAuthoritydoesnotregulateEstatePlanning,LonsdalePensionTrusteesLtd,TaxPlanningorLifetime

FinancialPlanning.Theguidanceand/oradvicecontainedinthisdocumentissubjecttotheUKregulatoryregimeandis

thereforerestrictedtoconsumersbasedintheUK.

RegisteredinEngland:04573693.RegisteredOffice:3CuroPark,Frogmore,StAlbans,Hertfordshire,AL22DD.

©LonsdaleServicesLimited2019.Allrightsreserved.

Because you deserve independent advice and support

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Documents

Inheritance Tax - Lonsdale Services · residence nil rate band. If Melanie’s estate is to be split between her children James and Susan she would have the following nil rate bands