View more on these topics

Skandia says £1bn IHT bill is avoidable

Almost £1bn could unnecessarily be subjected to inheritance tax this year through a failure to write life insurance policies in trust, says Skandia.

In 2003-04 almost 11,000 insurance policies worth a total of £597 million were potentially taxed, but the proceeds of these policies may have been immune from IHT had they been held in a trust.

Skandia claims this figure may grow to £960 million in the 2007-08 tax year if the value of life insurance policies potentially liable to IHT continues to increase at the same pace as in previous years.

The new proposals to increase the IHT reporting thresholds, announced by HMRC last week, should further reduce the compliance burden associated with reporting trusts, according to Skandia.

Under the new proposals, more trusts should be below the higher thresholds of £210,000 and £255,000, compared to the previous limits of £10,000 for Chargeable Lifetime Transfers made in any one year and £40,000 for CLTs made over a ten-year period.

Skandia head of tax and financial planning Colin Jelley says: “When someone takes out a life insurance policy, setting up a trust is a simple step that can be well worth doing. The value of holding a policy in a trust can be substantial and there are seldom situations where it makes sense not to put a protection policy in trust. Nearly £1 billion may have been taxed unnecessarily in a single year – it would be crazy for that to happen again this year.”

Recommended

Torquil Clark duo plan new venture

Torquil Clark Life Insurance directors Jason King and Simon Platt have quit the firm to set up a new venture.King and Platt co-founded Life Policies Direct in 1999, which was later acquired by Torquil Clark in 2004.The pair have not yet announced details of the planned business but say it is unlikely to launch until […]

Yearsley warns boutiques could quit enlarged group

Advisers are split over whether Resolution’s investment boutiques will stay with the fund house if the proposed merger with F&C goes ahead.Hargreaves Lansdown senior investment manager Ben Yearsley says he would be very surprised if the four boutiques stayed with the enlarged group.He says: “There is bound to be a change of ownership clause in […]

JFSC releases Codes of Practice consultation paper

The Jersey Financial Services Commission has issued a consultation paper proposing amendments to the Codes of Practice for investment, deposit-taking, insurance and trust company business.

ScotProv in rethink of CI timeline

Scottish Provident has updated its critical-illness definitions timeline to include the Association of Brit-ish Insurers’ critical illness standard definitions, released this year.The timeline outlines the insurer’s current definition for each illness and details all the past definitions that it has used since the product was launched.ScotProv says that it is the only insurer offering such […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment

    Close

    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm

    Email: customerservices@moneymarketing.com