Inheritance solution that aims to protect against tax burdens

Aiming to curb the stress and often complex position which inheritance tax (IHT) can leave beneficiaries in following bereavement, is Foresight Group’s accelerated inheritance tax product.

Launched in June. and combining Business Property Relief (BPR)—an incentive for certain trading investment—and group insurance policy, it endeavours to provide immediate protection from IHT, as well as maintenance of access to and control over assets.

Inheritance tax does not apply to BPR qualified assets, although this qualification period can take up to two years. Should an investor die during this time, IHT would still apply to their assets. Created for those wishing to have their assets immediately protected from IHT, the Foresight Accelerated Inheritance Tax Solution (ITS) aims to offer peace of mind for individuals and includes a Lloyds of London syndicate insurance policy. This covers the two-year gap period which the BPR would otherwise take in order to exempt said assets from IHT.

The proceeds of the insurance scheme will pay out 40% of the initial investment to the beneficiary named, which can then be used to offset the IHT, should the investor die during the first two years. Following this two year period, BPR should apply to the shares thus meaning they are no longer liable for IHT to be due on their worth. This is subject to the investor continuing to hold their shares upon death. Insurance cover will automatically end therefore, when this two-year period has ceased.

The introduction of Foresight’s product last summer came as the number of individuals liable to inheritance tax is growing. Over the 2015/16 period, HMRC receipts for IHT were at record high levels with £4.6 billion generated in revenues. This figure is expected to rise even further in following years.

Sales Director Hugi Clarke explained the common difficulties for individuals caused by inheritance tax: “Inheritance Tax is widely seen as the most unfair tax of all – it can be galling to think that after a lifetime of paying tax building up your estate, your beneficiaries may have to pay another raft of tax when you pass it on. And the products that are already available to mitigate IHT often come with a sting in the tail. For example gifts and trusts can take several years to be fully effective and can mean giving up access to, and control of, assets.”

Encouraging people to avoid family members being left “tied up in probate”, Clarke concluded:Anyone with a single estate valued at £325,000, or a joint estate of £650,000 really should be looking to mitigate their IHT risks, as should all of those who are in real danger of house-price increases and inflation pushing them into these brackets in coming years. The Treasury is taking more and more from IHT – people need to plan in advance to protect the assets they have worked so hard to build during their lifetime.”

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