On the subject of planning, many are aware of the tax-free benefits of ISAs- individual savings accounts. There is no income tax on income generated and no capital gains tax on disposals. However, what is often overlooked is the fact that these will form part of your estate for inheritance tax purposes – so there could be a 40% tax charge on death on the capital value!
There are ways and means of obtaining the same tax-free benefits as investing in ISAs but also obtaining IHT relief on the capital too so that the assets fall outside of the estate for IHT purposes – a potential 40% saving!
Whilst on the subject of savings, the interest rate on cash ISAs can be extremely low, and, given the first £1000 of interest for basic rate taxpayers or the first £500 for higher rate taxpayers is now tax free too, there might be better interest rates outside of the ISA wrapper. Give us a call if you would like to discuss this further.
