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Where Taxpayers and Advisers Meet

IHT planning for £2.5m estate

sjmanchester
Posts:7
Joined:Wed Sep 28, 2016 7:22 am
IHT planning for £2.5m estate

Postby sjmanchester » Wed Jul 26, 2017 12:19 pm

I'm helping my father limit his IHT liability for our family. We've spoken to a few financial advisers but they only seem interested in him transferring his stocks and shares portfolio over to them to manage - no one has come back with anything actually useful.

Breakdown is as follows:

Main residence - £1mil
2 x buy to let flats - £1m total (500k each)
Stocks and shares portfolio - £400k
Savings £100k

There are three children to split the assets between. Unmarried, no mortgages, credit card debt or loans. Cannot gift the two BTL flats to children as these generate income for him to live on, as do the shares, so he has an interest in them.

Any suggestions?

Many thanks for your help!

maths
Posts:8507
Joined:Wed Aug 06, 2008 3:25 pm

Re: IHT planning for £2.5m estate

Postby maths » Wed Jul 26, 2017 8:08 pm

Cannot gift the two BTL flats to children as these generate income for him to live on, as do the shares, so he has an interest in them.
Not correct.

Father could gift say a 95% interest in each of the two flats to the three children, retaining say 5% whilst you all agree he can retain 100% of the rental income.

On the gifts a CGT charge would probably arise but 95% of the two flats would then fall outside his estate for IHT purposes.

His estate would then amount to circa £1.5m. He may have a transferable nil rate band from his wife (if she died)) plus the new RNRB (£100k or possibly £200k).

AnthonyR
Posts:322
Joined:Wed Feb 08, 2017 2:33 pm

Re: IHT planning for £2.5m estate

Postby AnthonyR » Wed Jul 26, 2017 8:29 pm

Depending on his attitude towards investment risk, your father could also consider re-investing some of his investments into a BPR qualifying investment/portfolio, which would provide exemption from IHT after 2 years. There are a number that also generate a pretty decent return at the moment, bearing in mind what else is available out there.
Anthony Rogers LLB CTA TEP
Fusion Partners LLP
anthony@fusionpartners.co.uk


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