Avoiding Common Inheritance Tax Pitfalls: Key Insights from Ian Dyall
Six costly inheritance tax mistakes: IAN DYALL reveals the worst blunders you can make
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Ian Dyall, head of estate planning at Evelyn Partners, highlights six costly mistakes individuals make regarding inheritance tax. With upcoming changes including the inclusion of unspent pension assets in estates, more families will face increased tax liabilities. Seeking professional advice and regularly updating wills can help mitigate these risks.
- 01Unspent pension assets will be included in inheritance tax calculations starting April 2024, impacting an estimated 31,200 estates by 2030.
- 02Many individuals fail to update their wills after major life events, potentially leading to unintended asset distribution and increased tax liabilities.
- 03Gifting assets can backfire if not properly documented, as gifts above annual exemptions may still count towards inheritance tax if the donor retains benefits.
- 04Taper relief for gifts made within seven years of death only applies to amounts exceeding the nil rate band, complicating tax calculations.
- 05Unmarried cohabitees lack spousal exemptions, risking significant inheritance tax burdens on surviving partners.
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Ian Dyall, head of estate planning at Evelyn Partners, underscores the increasing complexities of inheritance tax, especially with the impending inclusion of unspent pension assets in estates from April 2024. This change is expected to affect approximately 31,200 estates by 2030, heightening concerns over tax liabilities. Dyall emphasizes the importance of regularly updating wills to avoid unintended distributions and unnecessary tax burdens, particularly after major life events such as marriage or divorce. He warns against common gifting mistakes, noting that gifts above annual exemptions can still impact inheritance tax calculations if the donor retains any benefits. Furthermore, he clarifies that taper relief for gifts made within seven years of death is not as straightforward as many believe, as it only applies to amounts exceeding the £325,000 nil rate band. Lastly, Dyall highlights that unmarried cohabitees lack the spousal exemptions that can significantly mitigate inheritance tax, potentially leaving surviving partners with substantial liabilities.
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Families need to reassess their estate planning strategies to avoid unexpected tax liabilities, especially with the new rules regarding pensions.
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