“Privileges have only half their worth, if they cannot be transmitted to one’s children.” Leon Trotsky. Too much for ‘Uncle Joe’ Stalin (who had him murdered), and a bit strong for HMRC. If inheritance is almost universally recognised as a basic human right (or at least satisfaction) then now is the time to do something about it. So how can one outwit the confiscators? A few thoughts:
- Give early and give outright – and survive 7 years for total inheritance tax avoidance.
- Get grandparents investing. Income from money given to grandchildren is taxed as the child’s income not the parents’, so kids’ £10,000 personal allowances should exempt it from tax.
- Consider the junior ISA. I’m not a vast fan: it cannot be touched until 18, so good for uni. but not school fees. The investments have to do very well to use the capital gains tax relief, and (see above) you may be able to use the child’s personal income tax allowance anyway.
- Consider children’s stakeholder pensions for the longest term – but get advice first.
- Think long. Trusts can have their uses over several generations, especially when combined with business or agricultural reliefs.