Wealth management experts from RBC Brewin Dolphin are sounding the alarm for families to urgently review their inheritance tax and insurance plans before the Autumn Budget rolls out on October 30.
Chancellor Rachel Reeves is about to deliver Labour’s first financial statement of the season, and it’s anticipated to be a tough one with potential “painful” tax adjustments on the horizon, following a pre-warning issued by Sir Keir Starmer.
As we edge closer to the big reveal, RBC Brewin Dolphin wealth managers are reaching out with some crucial last-ditch advice.
Top of the Chancellor’s list is expected to be an overhaul of Inheritance Tax gifting rules, which many individuals use as a backdoor to pass on chunks of their wealth tax-free years before their death.
However, financial planner Carla Morris has raised concerns that in an attempt to dodge the incoming changes, families might rush into decisions that could do more harm than good.
The expert issued a stark heads-up, pointing out: “Inheritance tax is paid by a few but feared by all.”
She’s urging proactive moves encouraged people to consult with finance professionals to avoid knee-jerk reactions ahead of the budget announcement.
Her cautionary words resonate especially when dealing with gifts, stressing to clients the critical nature of keeping sufficient funds for any unforeseen future care needs.
To possibly counteract these tax workarounds, there’s talk that the standard seven-year wait period to secure tax-free gifting status might be pushed up to ten years — a change that Morris believes could spark earlier financial planning discussions among families, driving home the need for astute advice now more than ever, considering the extended look-ahead required to secure personal financial security.
The seven-year rule, a little-known inheritance tax detail, could catch many off-guard, warns an expert. Gifts made more than seven years before death are not subject to Inheritance Tax, but if you pass away within those seven years, your loved ones could face a hefty tax bill with rates from 8% to 40%, depending on when the gift was given.
The specialist pointed out that this often shocks grieving families who find themselves saddled with unexpected taxes due to gifts made by the deceased years earlier. There’s talk of extending this period to 10 years, which could worsen the situation.
Carla advised: “A carefully considered lifetime gifting plan can ensure a client gets to see the positive difference they can make to their families lives and financial security, but it needs careful advice and managing, which could include life cover, trusts and definitely needs good record keeping.
“To ensure you can enjoy a long and comfortable retirement as well as help your family it is crucial to plan ahead and take advice.”
