INHERITANCE TAX,WHY YOU SHOULDN’T PAY

You may not know this about me but I regard myself as a modern-day Robin Hood. That’s because I steal from the rich and give to the poor. Now before you call the police allow me to explain – by ‘stealing’ I don’t mean theft in the traditional sense. What I mean I that I even things up by taking valuable information which is usually available only to the wealthiest elite and I disseminate that information to the masses. Stealing information and knowledge is far more valuable than money, and in any case, it’s not stealing anyway. The rich just happen to have acquired this information/knowledge but they don’t own it of course – nobody does. For example, I have just finished writing my book called the “13 Insider City trading secrets that will blow your mind” and the entire purpose of this book was one simple thing – to try to help retail investors, i.e. the average everyday person on the street, not to screwed by the professional hedge-funds and investment banks. As somebody sitting on this side of the fence I was fortunate enough to be privy to lots of information which I think is intentionally held back by the professionals to allow them to invest with the odds in their favour. I also believe that investments shouldn’t be like that. It should be an open forum for all. We all know that knowledge is power but the problem is that in the digital age that we now find ourselves in, there is so much ‘bad’ knowledge being fed to us, it’s hard to know what is right and what is frankly absolute crap. That’s why I’m here to share you with the real and right knowledge that you need to know. Take inheritance tax for example. How can it be fair to anyone? It’s wrong on so many levels. For a start it’s a tax that has been banned by countless countries all over the world because they realised that it wasn’t just or equitable. The whole idea of tax is to ensure that society is fairer. It’s a method to distribute funds primarily from the wealthy to the poor, less privileged so that it can give rise to fantastic institutions like the NHS for example. But how can society be fairer if you are taxing people, rich or poor, on money that has already been taxed? I just don’t understand that principle and nor does anybody else that I speak to. You have earned your money, you have worked hard, saved, paid your taxes and finally when all said and done, the tax man comes and clobbers you with a 40% tax bill. That’s not right and so I have made it my mission in life to help as many people as I can to get around it through legitimate and legal means. In fact, this year (and last year) I spent several months immersed in the world of taxation and specifically Inheritance Tax so that I could learn what really went on in the inside. In fact, I am still reading up and developing my knowledge every few weeks because of the ongoing changes. Now I should point out that I am not a tax advisor and I’m not qualified to give tax advice but then I don’t think that should really matter because presumably nobody reading this short article is about to create their own tax strategy on the back of it. However, what I hope that it will encourage you to do is to take some action about what steps you can consider to keep the tax man away from your estate. Remember also that IHT is completely regressive which makes it even more unfair. It actually affects the poorest the hardest. Everyone pays 40% and so it’s not progressive like every other major tax is, income and capital gains tax included. Also, if you are wealthy and you happen to have £50m stashed away you are probably going to be able to pay the smartest lawyers and tax advisors who will create bullet-proof trust structures to save you money. Compare that to an ‘average’ everyday person who is relying on Google or their local accountant friend to help them. Again, not exactly fair. Anyway, enough with the problems and let’s move on to the solutions. The good news is that there are plenty of solutions out there to IHT because whilst the Government may wish to screw you for every penny that you have, it does know that it has to at least be seen to be fair. In other words, to avoid a revolution it can’t bring in draconian tax laws without giving some solutions (remember what happened to Thatcher’s popularity after she introduced the Poll Tax back in the 1980s?). So, there are solutions and surprisingly they are pretty straight forward to be honest. From my own personal research and having spoken to some of my own personal network, which I am happy to say includes some of the finest tax brains in the country, I put together a shortlist of what I now call the ‘Top 10 Strategies’. It’s a simple but devastatingly effective (even if I do so say so myself) summary of different plays to mitigate IHT. For example, putting money into a SIPP or pension is a great way to safeguard your money from the tax man. With the threshold of just £325,000 (or £425k with the nil rate residence band) inheritance tax is no longer for the rich but for many people. Especially if you have been lucky enough to build up any type of property portfolio the chances are that you are going to be over that threshold. That’s why pensions are perfect for IHT as it offers 100% protection. Another one of the very big questions that I am faced with is how to move money and capital from a buy to let portfolio of houses into something which will mean that the money sits outside of a person’s estate for IHT purposes. Well moving into the AIM market is one way I would certainly suggest that you look at. Investing in companies which qualify for Business Property Relief (BPR) and holding those shares for more than 2 years is one of the quickest ways to substantially reduce your potential IHT bill. Alternatively, you could put your money into a trust, or take out a life insurance policy (again in trust), or you could buy an Enterprise Investment Scheme investment, or buy horse stud farmland, woodlands and so on. In fact, there are so many different ways that when I found about them all, I realised that the main reason people pay so much IHT is not that the Government is being so unfair but actually because it doesn’t really want anybody to know that most of it is avoidable. (I guess that’s more cheeky than unfair). In fact, I did a webinar not so long ago on exactly on the top 10 strategies that my research and trusted tax advisor friends came up with in terms of the best solutions. And whilst it won’t give you necessarily the specific solution to your specific circumstances (only a tax advisor can do that), it will certainly guide you much closer to the solution that is probably most suited to you. At least you can go into your tax meeting with a clear idea of what the options available are! And it’s quite possible that your tax person may not even be familiar with all of the solutions in any case.