As 2025 gets underway and the mince pies and merriment fall into the rear view mirror, there seems to be a real momentum behind people’s Estate Planning. Don’t get me wrong, we always see a spike in Estate Planning activity at the start of each year as people make new year’s resolutions to ‘finally get around to it’.
2025 feels different – there seems to be a real acknowledgement that this might be the last chance to really make a difference before certain Estate Planning opportunities are curtailed or closed off altogether.
As Government bond yields spike and the market’s confidence in UK PLC seems to be shaken, the headlines are already talking about the Chancellor having to come back with more tax rises and spending cuts as early as March (having delivered arguably the largest tax raising budget in modern history just over 2 months ago!).
Although there is no knowing what might be on the agenda, Inheritance Tax is always a popular option for Labour Chancellors looking to raise tax – a well informed comment at a networking event I attended this week made the point that pretty much all of the (negative) major IHT changes over the past 30 years or so have been made by Labour Governments.
As such, surely the time really is now to act on your own Estate Planning and perhaps 2025 should be the year that we keep those new years resolutions.
With the obvious exception of pensions coming into the scope of IHT, the remainder of the IHT planning landscape made it through the budget relatively unscathed (for now) and so there remain very generous reliefs, allowances, gifting limits and planning options all of which can make a very significant dent in one’s IHT liability.
The UK is a bit of an oxymoron in this respect. On the one hand, we have one of the harshest death duty regimes in the world – a 40% IHT charge on all assets in excess of a (relative to other countries) modest tax free allowance. On the other hand, we have almost unlimited scope to reduce or mitigate our IHT bill during our lifetimes whereas many other nations impose immediate tax on lifetime gifting making it much harder to avoid the eventual IHT charge.
All of this could of course be set to change.
As such, why not make 2025 the year you take action and take control of your own Estate Planning? It might be the last opportunity we have…
