Our European Strategist, Jeremy Batstone-Carr reflects on the Bank of England’s interest rate cuts, Japan’s recent policy changes and market uncertainty surrounding the US election.
Low notes and high notes
Our European Strategist, Jeremy Batstone-Carr reflects on the Bank of England’s interest rate cuts, Japan’s recent policy changes and market uncertainty surrounding the US election.
An insurance policy written in trust can help provide your beneficiaries with money to pay any inheritance tax bill. This could avoid your executors having to liquidate assets, like property or investments, in your estate.
Trusts can be complex and costly but they don’t have to be. They are suitable for a number of scenarios. For example, a grandparent might consider using a bare trust to gift money to minor grandchildren which can be used to pay school fees. The advantage of using a bare trust in this way is that the money inside the trust is treated as belonging to the child for tax purposes, allowing them to make use of their personal tax allowances and exemptions which may otherwise go unused.
The earlier you start planning, the easier it will potentially be to meet those lifetime objectives and create the lifestyle you want. If you are enrolled in a workplace pension scheme, you might want to consider enquiring into the maximum amount your employer will contribute on your behalf and consider raising your own contributions if there is scope for the company to raise theirs.
ISAs protect savers from Income and Capital Gains Tax on the underlying investments. This year’s ISA allowance is £20,000, so if you have any surplus income you might want to consider maximising your savings into an ISA.
This brings together all of your assets, income and expenditure in one place and acts like a personal balance sheet, helping with your wealth planning.
If there is an unequal division of income married couples or civil partners might want to consider equalising assets and/or maximising each person’s personal tax allowances.
Different options are available when saving for children, you could consider a Junior ISA (which offers tax-free income and growth) or establish a pension for your children which provides immediate income tax relief on the contribution and tax-free income and growth for the future.
Following the sale of a business, you may wish to consider establishing a Family Investment Company (FIC). A FIC is a private investment company whose shareholders are ordinarily family members. The company’s articles of association and memorandum are drafted to fit the needs of the family. The FIC offers certain tax advantages and can be used to pass wealth tax efficiently to the next generation whilst at the same time safeguarding family assets.
Venture Capital Trusts or Enterprise Investment Schemes can be of interest to those who pay higher or top rates of tax or who are restricted or not able to make pension contributions.
Once you are comfortable that you have sufficient capital and income for your chosen lifestyle, consider outright gifts which can be effective for inheritance tax planning.