Financial clouds and silver linings

31 March 2020

When undertaking inheritance tax planning thoughts will often turn to the gifting of assets to younger generations. When making gifts of (most non-cash) assets there are usually two principal tax considerations:

  1. The gift must usually be survived by the donor by seven years in order to become exempt from inheritance tax, the so called seven year race
  2. The donor is usually treated as having sold the asset for its open market value, triggering a charge to capital gains tax if the asset is standing at a gain.

Those with savings invested on various financial markets will have been watching the values of all the major indices tumbling over recent weeks, probably seeing large chunks of value knocked off their worth. During the 2008/09 financial crisis house prices also dropped sharply, with relevance for those in the buy to let sector if the housing slowdown predictions of estate agency bodies prove true.

Whilst bad news at a headline level, this slump in values could have a helpful effect on those two tax consequences, locking in the value which runs the seven year race at suppressed levels and enabling gifts to be made with substantially lower capital gains tax bills than only a couple of months ago.

If this might apply to your circumstances and if after a week at home you’ve already ticked off all the jobs on your to-do list, why not give me a call to explore what tax saving options might be available to you.