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What can Downton Abbey teach us about inheritance tax?

We look at what Downton Abbey can teach us about having an estate plan and the effect it can have when there isn't one.

Important notes

This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

This article is more than 6 months old

It was correct at the time of publishing. Our views and any references to tax, investment and pension rules may have changed since then.

Downton Abbey was a dramatic, yet perfect, example of the unwelcome aftermath of a lack of inheritance planning. The whole estate’s future hung in the balance after the shock death of Matthew Crawley.

Beyond the loss of a family figurehead, his death created an enormous tax bill, and caused tension, arguments and wrath among the family. Would they have to sell the estate to settle the tax liability?

Whether you’re a fan of the show or not, Downton Abbey teaches us an important lesson. While we don’t like to think about it, we all need a plan for when the worst happens.

It is worth noting that the budget is fast approaching and some MPs are recommending inheritance tax (IHT) changes.

IHT now impacting more people

Introduced in 1894, death duty – or inheritance tax – was only intended for the super-rich. But it will affect more and more of us in the future.

House prices have been rising and the government’s frozen the £325,000 IHT-free threshold until April 2021, although an additional threshold for the main home, currently of £150,000, was introduced in 2017/18 which has helped to offset the impact of rising house prices.

It's still no wonder IHT receipts could rise to £5.3 billion in 2019-20. Its highest ever.

Chart showing the outlook for future IHT receipts

IHT could be changing

With some MP’s recommending more tax changes, it’s all up in the air.

If you make a large gift to a loved one now it takes seven years to be free from IHT. Some MPs want to scrap this seven-year rule. Instead, they want to introduce a 10% charge on all annual gifts above an annual exemption, possibly of £30,000.

That's a bigger change than it sounds.

You may no longer be able to pass large amounts of money to loved ones tax free – for example to help with a house deposit.

But it’s not all bad news. Some MPs want to cut IHT from 40% to 10% for estates above £325,000.

This is all speculation at the moment, but tax rules do change and their benefits or impact depend on your personal circumstances.

With the Budget fast approaching, if you were planning to take action, you might want to take advantage of current rules while you can or contact us about advice to get the ball rolling.


Get your plan in place

Don’t end up like the Crawleys. Proper planning is all it takes.

A plan in place is all you need to pass on as much of your wealth as possible to your family when the time arises.

By planning your finances now, you could slash the amount of IHT your loved ones will have to pay.

With so much to think about, IHT planning can be tricky. See if one of our financial advisers could help.

Book a call today – there's nothing to lose

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1. Speak to our helpdesk

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If it is, they’ll pair you with the adviser best suited to your needs.

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2. Meet your adviser

They'll find out more about your goals and get to know your current situation. From here they can create a plan to secure your future.

Your adviser will also explain more about advice and any charges required to help you get the best out of our service.


3. Secure your future

As long as you’re happy with our charges, we’ll give you your plan to review.

Just say the word and we’ll help you secure your future by putting your plan into action.

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Please note IHT is a complicated area, which means the 2% charge will be more likely.

Plus act by 31 March and you could get a free Virgin Experience Days gift voucher worth £200. Find out how to book and see full terms at the bottom of the page.

Important notes

This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

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