What are the basics for minimising Inheritance tax? How do I find an independent advisor who specialises in this?

10 February 2022

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Question by Linda

I'm an attorney for a very elderly father (97 years) who is now in residential care. He is selling his house to pay for care as well as to pay off an equity release mortgage. I need advice on investing approx. £1 m with a view to minimising inheritance tax. What are the basics? How do I find an independent advisor who specialises in this?

Answered by Adam Holt

Hello Linda,

Thank you for your question. Taking action now is the right thing to do, with inheritance tax being 40% some smart decisions now could potentially help to save a fortune in inheritance tax later down the line.

To answer your second question, I am an Independent Financial Adviser with the specific qualifications required to give advice to someone like you acting on behalf of your father in residential care. If you would like to seek advice, then please feel free to get in contact I would be delighted to help. In the meantime, I will try and give you some of the basics to answer your first question.

I obviously don’t know the specific ins and outs of your family situation as we haven’t spoken yet, so I can’t provide any tailored investment/tax planning advice at this stage. However, this is how I would structure things if I was dealing with a client in your position.

Firstly, I would need to get a complete breakdown of your fathers current financial situation in order to calculate the value of his estate and get an idea of the overall position, then we could look to determine what thresholds he has in place before any inheritance tax would be paid (e.g Is he widowed? Would he be applicable for his wife’s nil rate band?). We would then have an idea as to what part of his wealth could be subject to inheritance tax. Before making any investments decisions, its important to view his income and expenditure. What money has he got coming in and from where? What are his ongoing costs? Is there a shortfall? If so, how is this going to be met going forward?

We would then look to see whether he is utilising his allowances regarding gifts, and whether he has made any substantial gifts in the past that may fall back into his estate today if he was to pass (there is a 7 year gift clock, that really can make things extra complicated!). Once all this information is present then I would be in a position to recommend any trust planning or specific investment products in order to preserve/grow wealth and mitigate inheritance tax via an HMRC approved investment scheme.

Inheritance tax planning can be very complicated, and you may not be able to mitigate it completely, but as I mentioned before there are some very simple steps you can make along with some much more complex ones to improve the situation.

I hope that helps, and I look forward to hearing from you.

Answered by

Adam Holt

Independent Financial Adviser

I’m an Independent Financial Adviser who splits time between my office in London and working from home in Kent.