Devonshire's East Devon magazine September October 2018

MANAGING your MONEY
"the hardest thing in the world
to understand is income tax"
Albert Einstein
Celebrating 26 years of
providing independent
financial advice in Devon
Inheritance Tax
It's bigger than ever...
Helen Mulvaney
BA (Hons), Dip M, DipPFS
Proprietor of
RICHMOND INDEPENDENT
Recent statistics reveal that a record amount of IHT was
being paid by estates in the tax year 2017/18.
Helen has been advising
clients in the East Devon
for the past 26 years and
specialises in the provision
of retirement and
investment advice.
£5.2billion* of IHT was paid, up
around 92%, since the 2010/11
tax year when HMRC pulled in
£2.7 billion. This is an enormous
increase which is probably due to
a number of factors. Firstly the
nil-rate band has been frozen
at £325,000 per individual since
2009/10 and in the interim house
prices and shares have generally
increased significantly. But another
factor might be that many people
are just not seeking advice on
how to mitigate this tax. Moreover
the increase in the amount of IHT
collected by HMRC comes despite
the new main residence nil rate
band allowance which will mean
that a couple will be able to pass
up to £1m to their children by
2020/21 (as long as the family home
is included).
I suspect that much of the problem
is due to the fact that talking about
IHT means talking about death
and many people are reluctant to
believe that they have reached the
time in life when this starts to be a
pressing matter. I've heard people
say that they'll simply spend the
money or that it will go in care fees
anyway and this is an easy way to
avoid the topic. However, the fact
is that more money is being paid in
IHT due to lack of planning. A recent
survey by Which revealed that
61% of us don't have a will which
demonstrates the vast majority of
us aren't prepared to face up to
the inevitable. Our millennials are
constantly pointing out that they
Redirecting unused
income towards
pension or savings
plan for your child
may save some IHT
are debt ridden (from university
fees), unable to buy their own
property and can't start a pension
- let alone a family - because they
are unable to afford it. Steep house
prices and a flood of graduates
chasing top jobs has inevitably
meant that many are stuck in lower
paid jobs and will need years to
save up towards a home of their
own. I doubt this situation is going
to improve and therefore there is
a need to start planning for the
coming generation's finances early
on. The earlier this is started the
better as a longer time frame means
that more risk and consequentially
more potential returns can be
earned on the savings. This can be
done by grandparents (or parents -
if they are financially able). Regular
savings from normal expenditure
would be exempt from IHT and
building up savings with a long
time frame and a reasonable risk
framework would mean that there
may be a reasonable fund available
for house purchase and that by
the time they reached retirement
age there might be a substantial
pension fund. Funding a pension is
a viable option for young children as
there are significant tax breaks and
the money will be made available at
retirement (so no chance of blowing
it all on a motorbike at 16). Often,
in retirement, income is generated
and not used and just recycled back
to bank or building society accounts
which are currently earning very
poor interest rates. Redirecting
this unused income towards a
pension plan or savings plan for
a grandchild might make a huge
difference to their future and you
may save some IHT.
richmondindependent.co.uk
helen@richmond-ifa.com
01395 512166
There are many ways of mitigating
IHT and it's important to seek
advice. For some, the new main
residence nil rate band may solve
the problem (although please note
that legislation can, and often does
change), but for others a range of
planning may make a difference
to the amount of IHT payable and
could provide some relief for the
challenges facing new generations.
Please note that the Financial
Conduct Authority does not
regulate Inheritance Tax Planning.
Helen Mulvaney
*Figures from HMRC
Richmond Independent is a trading
name of Investment & Financial
Solutions Partnership LLP which is
authorised and regulated by the
Financial Conduct Authority
The Old Vet’nary
continued from page 97
So we moved to a delightful spot
in the grounds of a Country House
Hotel. It was an idyllic time, or would
have been had we not all had the
dreaded Finals hanging over us.
The staff, from Professors down
to technicians made it so pleasant
and I shall be forever grateful. My
wife together with our first dog,
a Dachshund called Dandy, would
walk the mile to the shops in Goring
through beautiful countryside and,
joyously, I passed my Finals at first
attempt. Despite our penurious
poverty we were sad to leave. At
last I was deemed fit to be let loose
on the, no doubt anxious, world of
veterinary practice. I have a photo
of six of us students posing around
a horse, two professors, one future
head of the Army Veterinary Service,
one American drop-out and two
General Practitioners; and of these
who do I rate the most? why the GP’s
of course! - Ken
98
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