The joy of giving (and leaving as little as you can to the taxman!)

INHERITANCE tax has been with us in various shapes and forms for more than 300 years. It divides opinion. It is charged at a steep 40 per cent on the value of estates in excess of £325,000 although there is a further exemption for those passing on their home to offspring.

Some politicians, primarily Conservatives, hate it and believe it should be abolished.

Others – including those on the Left of the political spectrum – argue that it should be reformed with the tax being paid by those who receive the proceeds rather than from the estate of the deceased.

Although thought of as paid only by the wealthy, inheritance tax has increasingly become a revenueraising weapon. The nil-rate band has been stuck in deep mud at £325,000 since 2009 and it looks as if it is staying there until 2028 – maybe later – as this Government and the next one attempt to mend the nation’s finances.

As a result of this classic case of fiscal drag (a Conservative speciality), more estates are being sucked into inheritance tax territory. The latest statistics confirm that the amount of tax raised from this death duty shot up in the six months to October this year by 14 per cent to £4.1billion. The Office for Budget Responsibility, a scrutineer of Government figures, estimates that inheritance tax receipts will rise to £7.8billion in the tax year ending April 5, 2028, compared to £6.1 billion in the tax year ended April 5 this year.

Of course, there are plenty of ways in which inheritance tax bills can be kept down – for example, through making gifts to family and friends, putting life assurance policies in trust and having an up-todate will in place. Employing a good financial planner will also pay for itself in tax saved.

‘The key is to plan for the tax as soon as possible,’ says Jessica Ayres, a chartered financial adviser with Timothy James & Partners, who I met for coffee last week.

‘As Benjamin Franklin, one of the founding fathers of the United States of America, said: “In this world, nothing is certain except death and taxes.” So ensure you leave as little as possible of your hard-earned assets to the taxman.’

Absolutely. Well said Jessica.