Inheritance Tax reforms

After the news of the billionaire landowner the Duke of Westminster’s death, Enables IFA’s in Bishops Stortford have followed the news that his 25 year old son will inherit the family estate and a £9bn fortune making him the third wealthiest landowner in Britain and 68th wealthiest person in the world, according to Forbes. At the heart of this fortune is the 300-year-old Grosvenor estate in London, which began in 1677 as 500 acres of land including Mayfair and Belgravia and including Eaton Square, built close to Buckingham Palace and the Houses of Parliament during the housing boom that followed the Napoleonic wars.

The Grosvenor property firm is probably the largest property management company in the UK by value. And if the Grosvenor estate had been liable for 40% inheritance tax, the amount owed to the Treasury would have been close to the government’s entire death duty taxation for the last financial year. Britain’s generous trust law however ensure that many of the country’s largest fortunes are largely kept intact.

“The benefits of trusts are that they don’t form part of somebody’s estate,” says Ian Dyall, of Towry.  Instead of one-off taxation, trusts are subject to charges every 10 years from the anniversary of their creation. Known as the inheritance tax periodic charge, it can amount to 6% of the funds held. Pressure groups have been calling on the government to publish a new central register of trusts, which names their beneficiaries and settlors. They want an obligation to publish annual accounts for those collections of assets deemed to have public interest.

George Hodgson, interim chief executive of the Society of Trust and Estate Practitioners, on the other hand has argued for central registers to remain private because many beneficiaries are children or vulnerable adults and protect businesses. “An awful lot of trusts are used to hold family businesses, be they farms or manufacturing businesses. Successive governments have decided that is in the best interests of the economy and therefore the public at large.” Having an estate to pass on can be a tricky business but Enable’s IFAs in Bishops Stortford can help you make the best of your inheritance options.

Sources:
https://www.landlordtoday.co.uk/breaking-news/2016/8/25-year-old-man-to-inherit-9bn-buy-to-let-portfolio
https://www.theguardian.com/business/2016/aug/11/duke-westminster-hugh-grosvenor-inheritance-tax-reform
https://www.theguardian.com/money/2016/aug/11/inheritance-tax-why-the-new-duke-of-westminster-will-not-pay-billions

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