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SPONSORED CONTENT: The End of the Financial Year is Looming: How to Best Protect Your Assets

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Julie Doncaster.
Julie Doncaster.

Julie Doncaster is a partner in the private client team at law firm Harper Macleod

The End of the Financial Year is Looming: How to Best Protect Your Assets

With the end of the financial year fast approaching, now is the last chance to make full use of this year’s Inheritance Tax (“IHT”) and Capital Gains Tax (“CGT”) allowances. The deadline, which falls on 5th April each year, is a good reminder to put your financial affairs in order – be it as part of your own estate planning or when acting as an executor or attorney for someone else.

Broadly speaking and subject to certain conditions and additional provisions, the current threshold before any IHT is payable on an estate is £325,000 - an allowance which has remained the same since 2009 despite the ever increasing costs of living. Anything above that threshold is taxed at 40%.

Meanwhile, the CGT threshold stands at £12,300 for individuals and estates. The rate of this tax can vary greatly depending on the type of asset you are selling and whether you are a basic or higher rate tax payer. Regardless, it is becoming more and more lucrative for HM Revenue & Customs, whose CGT bill jumped from £10.8 billion to a record £14.6 billion in the last year alone.

When you factor in these taxes, it is easy to see how the wealth you have accumulated throughout your lifetime which, in all likelihood, you probably want to preserve and pass on to your loved ones and future generations, could be eroded quite quickly. Yet, despite calls by The Office of Tax Simplification, the Chancellor announced a freeze to the IHT and CGT allowances until at least 5th April 2026. This means that for years to come, plenty more estates will be “caught” by IHT and/or CGT due to growing inflation rates, and increasing house prices and share values, amongst other factors.

This is why it is never too early to start thinking about estate planning. No matter the value of your assets or your age, nearly everyone has something that they would like to protect and pass on to those closest to them.

The good news is that with some careful lifetime planning it is possible to mitigate or even avoid these tax liabilities. There are various options available to account for differing financial and family circumstances including through the use of Wills and Powers of Attorney as well as gifting and lifetime Trusts.

At Harper Macleod, our private client lawyers focus on building relationships with all of our clients and providing advice on an ongoing basis being mindful of the longer term goals and priorities of each individual.

Should you wish to discuss any of our private client services, please get in touch.

Harper Macleod
Harper Macleod

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