We are living in a volatile and ever changing environment due to the uncertainty caused by the global coronavirus pandemic. Benjamin Franklin was correct however, when he stated 'But in this world nothing can be said to be certain, except death and taxes', a statement perhaps never more pertinent than now.
So with that in mind, what CAN be done to plan for the future in the midst of our current Coronavirus state?
Gifting of assets
If you had been considering tax planning pre-pandemic but were restricted due to the values involved from an IHT planning perspective or the capital gains tax implications of a disposal at market value, it is possible that you could now find yourself in quite a different position bearing in mind the movement in markets over the last 6-8 weeks.
With many having witnessed a fall in value of their investment portfolios and other assets, an opportunity to gift away some of these assets in life, either by way of a gift to a Trust, to hold the assets for future generations, or directly, to family members or others may well have presented itself. The gift would allow the uplift on recovery of the markets and all future growth to be accrued outside your personal estate.
Capital Gains tax
With many assets now sitting with significantly reduced gains or in a capital loss position, the gifting of these assets may be able to be done without significant impact from a capital gains tax perspective. The amount of gains a person can realise in the current tax year 2020/21 has risen slightly to £12,300. Realised losses which are not offset against gains in the current tax year can be carried forward and offset against gains in future years as required.
Planning for Executors
In Estates where inheritance tax has been paid, or will be due, it is important to remember that some potentially valuable reliefs are available which might allow the lower sale value to be charged to Inheritance tax rather than the higher date of death value, resulting in a reduced calculation and or a refund of tax.
Get in touch
Now may well be the perfect time to consider tax planning opportunities in order to protect the future growth of your estate from taxes.
If you require assistance in relation to tax planning, please get in touch with a member of our team.