Spectre of IHT will continue to haunt estates in wake of Treasury hunt for billions to support banks.

Planning more crucial than ever in wake of great bank bail out and local authority/charity savings' disaster, warns The WAY Group.

… any Tory plans for dramatically raising IHT threshold if elected will surely be sidelined now Treasury has to raise billions from tax payers, warns WAY Fund Managers

… shares and property price bounce predicted within two years when sanity returns to market

… portfolios switched to accessible IHT trusts now will escape punitive tax

THE GREAT bank bail-out and associated issues will have a direct impact on future government IHT planning, inheritance tax planning specialist and wealth manager WAY Fund Managers Ltd warned today.

The Treasury will be under 'intense pressure' to raise additional billions from UK tax payers to cover the £500 billion plus needed for the Government's banking lifeboat plan – and additional funding may also be needed to rebuild local authority and charitable organisation coffers in the wake of Icelandic bank bankruptcies, said the WAY chairman and technical director Paul Wilcox.

“Recently we issued an alert advising households not to be complacent over IHT planning in the event a Tory government came to power and raised the joint IHT threshold to £2m.

“We are now convinced that irrespective of which party comes to power at the next General Election, inheritance tax, which brings in billions of pounds a year to an overstretched Treasury, will continue to be seen as a golden goose,” said Wilcox.

“While markets are currently experiencing unprecedented volatility, collective action by administrations around the world will eventually see a return to equities' values, and we are likely to see a sharp bounce back for investor portfolios.

“Given the likelihood of a major recovery in share values a couple of years down the line, now is the time for investors to move assets out of their estates and start the 7 year clock ticking, using sophisticated trust style planning where they can retain access to those assets in the future should this be necessary,” he said.

“By gifting at currently depressed values, gifts (or loans) can be made at lower taxable values and inevitable, subsequent growth will occur outside the donor's estate.

“Since gains are now taxed at 18% compared with higher rate taxpayers' 40%, we recommend structures which use direct investments such as highly flexible collectives which can be unwound should the donor require funds later, or if the need for IHT mitigation melts away,” added Wilcox.

Neither should homeowners be complacent about the recent sharp fall in property values, he warned.

“Clearly, older homeowners will be lulled into a false sense of security, thinking that the current slide in values will shield them from IHT.

“Prices have fallen since the credit crunch began to bite, but there are already signs of a gradual stabilising, and the Government has a new homes target to meet, so builders will start to build again as banks gradually regain the confidence to lend - and there is likely to be a surge in values in property prices – perhaps as early as 2010.

“IHT is often described as a stealth tax, but there is nothing stealthy about a massive 40 per cent bill slapped on the estate of those who have not made the appropriate plans.

“Just a few weeks ago the Tories, as a pre-election booster, were talking about raising the IHT threshold to £2m – or £1m for each partner in a married couple.

“But you really have to ask yourself if this can be in any way a realistic ambition – for any chancellor – given what we have seen happen to world markets, and the repercussions for the Treasury,” he said.

WAY Fund Managers has built a formidable reputation on the back of its unique expertise in devising IHT mitigation solutions designed to deal with the majority of scenarios.

Higher net worth households and those on more modest retirement incomes will benefit from the WAY range, which is constantly reviewed to keep one step ahead of any changes to taxation laws that might adversely affect UK taxpayers, wherever they live.

Consumer enquiries: WAY Group 01202 890895

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Editor's notes

Incorporated in 1996, The WAY Group is a privately owned financial services group.

The founders of the company include ex-independent financial advisers who specialised in offering portfolio management services to private and corporate investors.

They have combined their experience and skills with a number of ex-institutional fund managers to design, construct, oversee and market, suitable portfolio solutions to the IFA marketplace. The ethos and approach to product design continues to reflect an appreciation of the requirements of IFAs and their clients.

For further information about The WAY Group products and services please call 01202 890895, or visit www.WAYinvestments.co.uk

Cathy Tully 01273 774109 / 07747 196854 cathy@davidandrewsmedia.co.uk