IHT planning

[low profile]

I'm exposed to IHT, had my head in the sand about it but decided I need a plan.

Circumstances are UK based, decent health, non smoker, no spouse, no children, no job, no property, aged 60 so a few years to not quite a full state pension at 67, £100k+ in a SIPP and having sold up £750k+ largely in cash.

All I need from the pot is at least £20k inflation protected income, then leave any remaining pot to distant family.

As I understand it I'd currently be liable for about £170k IHT, any ideas gratefully received for how can I reduce it.

[jerome.lane]

Invest in IHT friendly assets or maybe contribute more to your pension. If you buy your own home and have an estate less than £2m, you should have a £500k NRB.

[AGoodman]

Not much you can do other than (as mentioned) invest in IHT assets such as AIM shares. That may not be a wise decision from an investment perspective given your overall wealth so you may just have to accept it.

You won't get the additional nil rate band (you can't leave your home to descendants) so everything over £325k will suffer tax.

[low profile]

Invest in IHT friendly assets or maybe contribute more to your pension. If you buy your own home and have an estate less than £2m, you should have a £500k NRB.

Obviously with no income I can only use £2,880 topped up to £3,600 for the tax relief. Due to that I hadn't really considered putting more in. I suppose I could put more in without the tax relief.

[low profile]

Not much you can do other than (as mentioned) invest in IHT assets such as AIM shares. That may not be a wise decision from an investment perspective given your overall wealth so you may just have to accept it.

You won't get the additional nil rate band (you can't leave your home to descendants) so everything over £325k will suffer tax.

So even if I buy a house and made it £500k house and £250k cash, it's taxed the same as £750k cash? Due to no dependents.

[jerome.lane]

I missed your point on you having no descendants so no NRB uplift unless you adopt which might be a big ask just to avoid IHT

[low profile]

I missed your point on you having no descendants so no NRB uplift unless you adopt which might be a big ask just to avoid IHT

Just checked and "For children who have been legally adopted, exactly the same inheritance rules apply as do for biological children", so it's an idea. I'd rather it went to someone in need than for the government to pass to some of their cronies. I'm going to read up on adopting a distant family member!