Is now the right time to transfer money into trust? Do the effects of the pandemic mean that taking advantage of depressed asset values can help save tax.
There is a high probability that all tax rates will have to increase to help pay for the government’s costs in dealing with the pandemic. So, taking advantage of the current rates of tax on assets with depressed values could be sensible planning
Lifetime gifts – to trusts
Such gifts are chargeable to inheritance tax if the value given exceeds the available nil rate band of the person making the gift (currently a full nil rate band is £325,000). It may be that the depressed value of an asset means that it can now be transferred into a trust without incurring any immediate inheritance tax charge. That can then lead to an additional tax advantage.
If assets go into a trust without inheritance tax being paid, that means for the next 10 years the rate of inheritance tax applying to that trust is 0%. That means that even if assets have increased in value before the 10 year anniversary, they can leave the trust before that date without any IHT charge.
In addition it is possible to defer any capital gains tax on the gift of assets to the trust.
This is very useful for starting the 7 year clock ticking, without committing to which relative is to inherit, or exactly when.
For more information on any of the items discussed in this article please contact Kerri Woodrow on 01604 463350 or click here
to email Kerri.
This is an outline guide only. No action should be taken based only on the information here. you should take appropriate professional advices tailored to your specific circumstances.
This article is the second in a series of four. To read the previous article on Gifts click here, to read the next article on Lifetime Gifts click here.