We might have expected that five months, one consultation document and thousands of tractors driven through London later, the dust might have started to settle on changes to the IHT regime announced within the Autumn Budget.
Unfortunately, it is very clear that few individuals feel sure-footed enough in navigating the new IHT landscape to make significant decisions. Current lack of detail around the proposed changes has left many in a state of inertia, paralysed by uncertainty and stalling action in the knowledge that many of the changes won’t be introduced until 2026 or 2027.
The life assurance route will be popular for many facing an increased IHT bill, although the availability and affordability of this route will vary with factors such as age and health.
The long-held mentality that funds carefully squirrelled away into private pensions should be utilised only as the ‘last port of call’ has been challenged by the proposed inclusion of these pots within the taxable estate on death from April 2027. Many now find themselves considering the counterintuitive step of taking their tax-free allowance from their private pension (or, indeed, taking an income tax hit to release funds) and either giving it away or looking into setting up a discretionary trust with the funds for future generations. What is clear, is that the government wants to limit the use of private pensions to allow for generational wealth transfer.
Furthermore, it is clear that this government isn’t afraid of making significant changes to taxation, and the current state of the economy may make further changes very tempting indeed.
There have also been many people considering the option of relocating. Receiving so many enquiries relating to a move to Greece or Italy, the professional adviser may start to feel more like a travel agent (and terribly jealous).
While watching and waiting may well be the right solution for some, taking advice early and often in times of great uncertainty often reaps the greatest rewards in terms of taking prompt and effective action.