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Julie Wilson

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37 Legal Ways To Slash Thousands Off Your Inheritance Tax Bill

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Julie Wilson

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NING. W R A W . G IN N R A W G. WARNING. Hey people. Please don’t take this little book as gospel. The rules around this bonkers tax change all the time. Except the bit you get to keep without taxing – that’s not changed for yonks. And cos your stuff’s value goes up all the time, but the bit that’s tax free stays the same, the bit the tax man steals from you is getting bigger all the time. This isn’t advice. Advice costs a lot more than the cost of this book. And some of these ways might not work for you. They’re just ideas – and some are just for a bit of a laugh. Although it’s no laughing matter. Well I suppose that depends who’s looking at it. The tax man is laughing all the way to the bank cos he gets to snaffle billions from unsuspecting victims. But your family won’t be laughing about it. When almost half of everything you’ve worked for goes down the swanny. No siree. They’re gonna be really brassed off about it. So I can’t possibly know what would be best for you cos I don’t know your circumstances. So don’t rely on anything I’ve said to make – or not make – plans to do something about it. Some of the things I mentioned might be regulated under the Financial Services Act 1986. Some might not. I can’t really tell cos I don’t know what you’re interested in. I don’t know anything about you. What I would say is don’t ignore Inheritance Tax. It isn’t going away.


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37 Legal Ways To Slash Thousands Off Your Inheritance Tax Bill

HERE’S THE INFORMATION

the Government doesn’t want to tell you about...


Julie Wilson

...And most lawyers and accountants don’t even know about!

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37 Legal Ways To Slash Thousands Off Your Inheritance Tax Bill

Please don’t copy any of this stuff or give it out to anyone without my permission. I slogged long and hard to make this book I’d be pretty miffed if you nicked any of it.


Julie Wilson

WHAT IS

Inheritance Tax? If you’re worth more than a certain limit when you die, the Government takes 40% - that’s almost half - of whatever you’re worth above that limit. The value of everything you own – your house, investments, car, jewellery etc - is added up when you die through a process called probate. Without probate, your beneficiaries can’t get their hands on your stuff. And part of the probate process is to tell the tax man how much you’re worth. And to add insult to injury, your representatives have to work out how much you owe the tax man and pay him before they can dish out the rest.

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37 Legal Ways To Slash Thousands Off Your Inheritance Tax Bill

IS INHERITANCE TAX

Fair?

Some people think that Inheritance Tax is fair. That it stops the rich from getting richer and redistributes wealth. Which it does. But is that fair? Let’s say I’ve slogged 12 hours a day, 7 days a week. I’ve bought a nice house with my earnings, and wisely invested spare money to create a valuable nest egg. When I die, is it fair that a great chunk of it is nicked off me and dished out to people who’ve been dicking about all their lives? I don’t think so. If you do, reading the rest of this book will be a waste of your time.


Julie Wilson

UK vs THE WORLD In the United States, you don’t pay death duties unless you’re worth at least $3 million. The average death tax of the BRIC nations (Brazil, Russia, India, China) is just 1%. Australia, New Zealand and Israel have scrapped death duties altogether. Yet Britain has the highest death duties of any of the world’s major economies. If you’re worth more than the limit (which in 2016 is only £325,000) you’ll pay tax at 40%. It’s legalised robbery if you ask me.

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37 Legal Ways To Slash Thousands Off Your Inheritance Tax Bill

WHY I DESPISE

Inheritance Tax

It’s a death tax on money you’ve already paid tax on. It was originally meant to tax the really rich people. But those people have often got smoke and mirrors they can use to get around it. The Duke of Westminster died with a £9 billion fortune. But his beneficiaries will pay very little Inheritance Tax because of clever trusts they’ve put in place for future generations.

So now IHT just affects ordinary people who’ve been smart with their money. And that is so not fair.


Julie Wilson

HOW DOES IHT

work in practice?

Let’s say you die in 2016. Your house, investments, savings and all your other stuff is worth, say £600,000. You get a £325,000 allowance. That leaves £275,000. Which is taxed at 40%. That’s £110,000 off down the pan.

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37 Legal Ways To Slash Thousands Off Your Inheritance Tax Bill

WHAT ABOUT THE

£1 million IHT limit? The Conservatives promised a £1 million IHT Limit and many people believe that limit now applies. But it’s actually a red herring. There are plans to gradually increase the IHT limit for people with valuable residential properties. But the new rules don’t come fully into play until 2021 – and even then the limit will only be half a million. If they keep their promises. Don’t tell anyone, but often they don’t. And even if they do, the additional allowance will probably be eaten up by property price increases. So don’t believe everything the politicians tell you!


Julie Wilson

I’ve been a financial planner all my working life. It’s my job to increase people’s wealth and protect it from greedy bankers, crazy Governments, desperate authorities and other legalised robbers. I can’t sit back and watch almost half of my life’s work be taken from you when you die. That’s why I’ve written this book. And that’s why I’ve made it my mission to save as many families as possible from this unfair tax.

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37 Legal Ways To Slash Thousands Off Your Inheritance Tax Bill

I’m a fellow of the Personal Finance Society – One of the highest qualifications in the business. I co-own a multi million pound financial planning advice company and other tax planning businesses. Me and my team have saved literally millions of pounds for our clients and their families that would otherwise go down the tax pan. Now I want to help ordinary people learn the simple steps they need to take so their money ends up with their family, not the tax man.


Julie Wilson’s FlickerJulie BookWilson Guides

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We contend that for a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle.

Winston Churchill


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37 Legal Ways To Slash Thousands Off Your Inheritance Tax Bill

DOES THIS

sound like you...?


Julie Wilson

There’s loads of excuses you can use to not do anything about IHT. And we know most people don’t do anything because more than £4 billion is raised from this tax every year. If you don’t do something, you’re effectively making the decision to give your hard earned money to the tax man.

So, what’s your excuse?

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1 You’re immortal You believe you’re immortal, or that you are not going to die in the foreseeable future and that you’ve got plenty of time to sort it out.

But many solutions take time to take effect, and it might already be later than you think.


Julie Wilson

2 You’re the big spender You think you’re going to spend all your money and that you’ll slide into the grave with a pint in one hand and your last tenner in the other shouting:

“Woohoo! What a ride!” Pop star Sting has recently said he’s not leaving his kids trust funds because he and Trudy are going to spend it all before they die. But it doesn’t work like that, because no-one knows when they are going to die. It could happen tomorrow, before you get chance to spend all your dosh, and then your lucky kids will inherit a massive IHT problem.

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3 You’re a control freak (we know who we are!)

You’re frightened of losing control and not being able to get to your money when you want it. You’re scared of running out of money. You’re not sure that your money will last as long as you do. Yet many of the solutions I use let people keep control and get to their money any time.

I call these ‘Have Your Cake And Eat It’ plans.


Julie Wilson

4 Analysis Paralysis You suffer from ‘analysis paralysis’. You don’t really understand the problem or the solutions, so you do nothing. The classic ‘ostrich’ approach.

This is how the Taxman ends up collecting over £4 billion from ordinary people like you every year.

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5 Now’t to do with me gov You’re genuinely unaware you have a problem, or you mistakenly believe you’ve sorted it out, even though the solutions you’ve used won’t actually work. The most common mistake I see is when people have ‘given’ their house away to their children but still live in it rent-free. Sorry - that won’t work. Another is when people have taken out insurance to pay the IHT bill, but haven’t wrapped the insurance in a trust.

Not only does this not work, but it actually makes the problem worse!


Julie Wilson

6 You’re a Scaredy Cat There’s been a lot of media noise lately about tax avoiders. An ever-increasing pack of self-proclaimed leaders of the tax-paying Great and Good are uncovering an everincreasing list of celebrity deviants – Jimmy Carr, Gary Barlow, Alex Ferguson to name a few who are allegedly depriving this civilised land we all live in the cost of having to live in it. Margaret Hodge MP is the latest to point the finger. But trust me when I say that Madge, along with just about every other politician, is doing her damnedest to pay as little tax as is humanly possible. And rightly so. It has been proved in court again and again that everyone has a right to arrange their affairs to pay as little tax as possible. Yes, there are dodgy smoke-and- mirroroffshore-double-tax-haven-super-schemes. But that’s not what I am talking about here, and every single one of my 37 ways to slash Inheritance Tax are proven, approved, above board and perfectly legal. No different to putting your money into an ISA to save Income Tax.

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7 You’re an Ostrich Just because you won’t look at it doesn’t make it go away. There’s been a death tax in this Country for hundreds of years. It’s not going away.


Julie Wilson

Taxation is just a sophisticated way of demanding money with menaces.

Terry Pratchett, Author

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WASTED All this nonsense wouldn’t be so bad if the billions of tax pounds collected were actually spent on something useful. But they’re not. I could write a book about how the Government waste £billions every year. In fact someone has. If you want to wind yourself up get a copy of ‘The Bumper Book of Government Waste.’ Or take a look at The Taxpayer’s Alliance who document a total of £82 billion is chucked down the tax pan on hare-brained schemes and jobs for the boys. If you don’t want to contribute to this madness, read on.


Julie Wilson

SO ARE YOU GOING

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to do something about it?


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37 Legal Ways To Slash Thousands Off Your Inheritance Tax Bill

Perfectly legal and above board I’m passionate about saving IHT for ordinary hardworking families, which is why I’m listing 37 ways to slash thousands of pounds off your Inheritance Tax, perfectly legally and above board. I can’t cover everything and it’s beyond the scope of this little book to cover complex estate planning where you have lots of different assets and businesses.


Julie Wilson

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Whatever you do it’s up to you And of course it’s up to you to decide if any of these 37 ways are right for you and your circumstances. The rules of the regulator, the Financial Conduct Authority (FCA), say I can’t give you personal advice without knowing your full circumstances. What they don’t get is that not everyone wants to pay people like me to sort out their tax affairs (although I would recommend it!) Some prefer to work it out for themselves, and I totally get that. That’s why I’ve written this guide - to help those DIY enthusiasts. I don’t want ANYONE to pay IHT unnecessarily, no matter how they choose to do it. So I might not be able to give you personal advice in this book, but I CAN give you information.


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Don’t put this on the ‘tomorrow’ pile Don’t put off sorting it out, though, as doing nothing might be more costly to your family than you can imagine! Most families can’t believe it when their loving parents have allowed the Taxman to get their hands on family money. Yet I’ve seen it happen hundreds of times. If you do have complex affairs, I strongly suggest you seek advice from a qualified independent financial adviser who specialises in this area. Don’t be one of the thousands who will contribute to the £4 billion+ raised by the Government every year from this crazy tax (Yes, I did say £4 billion+)!


Julie Wilson

Simple, straight-talking guidance Most Inheritance Tax guidance is littered with complicated explanations and unnecessary jargon. I’m a Yorkshire lass known for my straight talking. If you want technical, politically correct mumbo jumbo, go read the Inheritance Tax section on HMRC’s site!

BUT if you want simple ways to legally avoid IHT, explained in easy to understand terms, then this is for you.

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The avoidance of tax is the only intellectual pursuit that carries any reward.

John Maynard Keynes, Economist


Julie Wilson

SO WHAT’S

stopping you? There’s been a lot of legislation over the years to stop you from trying to pay less IHT. For example, you can’t give away your stuff and continue you use it - like giving your house to your children, but then living in it (known as ‘gift with reservation’). You also can’t give something away but reserve the right to get it back again if you want (known as ‘reversion to settlor’). Neither of these will work and won’t help a jot to reduce your IHT bill. And then there’s the ‘Pre-Owned Asset Tax’ (POAT), the ‘big gun’ of antiavoidance measures dreamt up by Gordon Brown which catches just about everything else not already caught by the other rules!

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SO WHAT TO DO? Thankfully, there are still things you can do to lower or get rid of Inheritance Tax altogether. And most are not that painful. But you have to be crafty to stay above board legally, and not get caught out with all these anti-avoidance rules.


Julie Wilson

THE NITTY GRITTY

Limit & Rates

The painful truth is that Inheritance Tax is charged at 40% on everything you own when you die above a certain limit, known as the ‘nil rate band’ (which is £325,000 in 2016). Everything you own on death - that’s your house, property, savings, investments, jewellery, valuables, cars, antiques, everything! - is counted towards the value of your estate for IHT purposes.

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SHOW ME

the numbers... To put that in context, here’s how it pans out for different sizes of estate: If you’re worth when you die

the bit that’s taxable is

so the tax will be

£500,000

£175,000

£70,000

£750,000

£425,000

£170,000

£1,000,000

£675,000

£270,000


Julie Wilson

NASTY, ISN’T IT? But there is a bit of good news. If you’re married, and your husband or wife inherits your estate, you don’t pay Inheritance Tax on that first death, it’s simply carried over to the surviving spouse until their death. The deceased spouse’s allowance is also carried over so that when the second spouse dies, there are two allowances available before IHT is charged.

At 2016 rates, that’s a total of £650,000 before IHT becomes payable.

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Next, lets work out the extent of the problem (if any)

You might have an idea of how much you’re worth, but it’s always worth checking again, and thinking about absolutely EVERYTHING that can be counted as an asset because it’s amazing how many of us undervalue our estates. You can be certain that Mr Taxman won’t make that mistake (You’d also be amazed how much he already knows about you)!


Julie Wilson

THE CALCULATIONS

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(sorry but they have to be done) You need to estimate how much you might pay in IHT, and these pages will help you do that. But in reality, you’re not ever going to get it right because you don’t know when you’ll die, what your stuff will be worth at the point, and what the Inheritance Tax rules will be at that time. But they do give you a rough idea. So deep breath – here goes:

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37 Legal Ways To Slash Thousands Off Your Inheritance Tax Bill

Use this calculator if you’re single:

Your Stuff

Value (approx)

Your main residence

a: £

Your cash – bank, building society, National Savings etc

b: £

Your investments – shares, unit trusts, bonds etc

c: £

Other properties – holiday homes, rental properties etc

d: £

Life assurance, pension death benefits etc

e: £

Other stuff – car, antiques, jewellery etc

f: £

Any other stuff

g: £

Your total estate value (add up a: to g:)

h: £

Less any debts – mortgages, loans etc

i: £

Your net estate value (h: minus i:)

j: £

Less the Nil Rate Band (IHT allowance - for a single person)

k: £

Your taxable estate is: (j: minus k:)

l: £

Your estimated Inheritance Tax bill (l: x 40%)

£

Insert your swear words here (optional!)


Julie Wilson

Here’s one I prepared earlier for a single person:

Your Stuff

Value (approx)

Your main residence

a: £400,000

Your cash – bank, building society, National Savings etc

b:

£50,000

Your investments – shares, unit trusts, bonds etc

c:

£50,000

Other properties – holiday homes, rental properties etc

d:

£ nil

Life assurance, pension death benefits etc

e: £100,000

Other stuff – car, antiques, jewellery etc

f:

£20,000

Any other stuff

g:

£ nil

Your total estate value (add up a: to g:)

h: £620,000

Less any debts – mortgages, loans etc

i:

£50,000

Your net estate value (h: minus i:)

j:

£570,000

Less the Nil Rate Band (IHT allowance - for a single person)

k: £325,000

Your taxable estate is: (j: minus k:)

l:

Your estimated Inheritance Tax bill (l: x 40%)

£245,000 £98,000

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Use this calculator if you’re married/in a civil partnership:

Your Stuff (value of everything you jointly own)

Value (approx)

Your main residence

a: £

Your cash – bank, building society, National Savings etc

b: £

Your investments – shares, unit trusts, bonds etc

c: £

Other properties – holiday homes, rental properties etc

d: £

Life assurance, pension death benefits etc

e: £

Other stuff – car, antiques, jewellery etc

f: £

Any other stuff

g: £

Your total estate value (add up a: to g:)

h: £

Less any debts – mortgages, loans etc

i: £

Your net estate value (h: minus i:)

j: £

Less the Nil Rate Band (IHT allowance x2 - married couple)

k: £

Your taxable estate is: (j: minus k:)

l: £

Your estimated Inheritance Tax bill (l: x 40%)

£

Insert your swear words here (optional!)


Julie Wilson

And here’s one I prepared earlier for a married couple:

Your Stuff

Value (approx)

Your main residence

a: £400,000

Your cash – bank, building society, National Savings etc

b: £100,000

Your investments – shares, unit trusts, bonds etc

c: £100,000

Other properties – holiday homes, rental properties etc

d:

£80,000

Life assurance, pension death benefits etc

e:

£ nil

Other stuff – car, antiques, jewellery etc

f:

£80,000

Any other stuff

g:

£40,000

Your total estate value (add up a: to g:)

h: £800,000

Less any debts – mortgages, loans etc

i:

£ nil

Your net estate value (h: minus i:)

j:

£800,000

Less the Nil Rate Band (IHT allowance - for a single person)

k: £650,000

Your taxable estate is: (j: minus k:)

l:

Your estimated Inheritance Tax bill (l: x 40%)

£150,000 £60,000

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Additional Main Residence Nil Rate Band (MRNRB) From 2017 an additional tax free allowance called the Main Residence Nil Rate Band is due to be phased in. The background to this fiasco is this: The Conservatives had promised an Inheritance Tax limit of £1 million per person back in 2008. In an attempt to look like they were going to keep their promise (I know. Policiticans. As if.) the Tories claimed they were introducing a £1 million limit from 2021. But here’s the rub. The £1 million limit is per couple. So that’s £500,000 each where I come from. And it only applies to couples who leave their main residence to a direct descendant. And not for people whose estates are worth more than £2 million. But, what’s worse is the reason for the gradual introduction of the MRNRB, in my view, is that expected house price increases during the staging period could ‘eat up’ this additional MRNRB. And if that proves to be the case, and because we know the Nil Rate Band has been frozen at £325,000 until at least 2021, the position then could very well be much the same as it is now.  And, of course, not everyone is a couple.  And not everyone has direct descendants. And do politicians have a good track record of keeping their promises? Just saying!


Julie Wilson

More on the MRNRB This could all be arbitrary if the rules change. Which they often do. So don’t rely on the information in this book to be accurate. The rules change all the time. And I don’t know when you’ll be reading this. But if the MRNRB does become reality and if you intend to leave your main residence to your direct descendants and if your estate isn’t going to be worth more than £2 million and if house prices haven’t eaten away all the benefit of the additional allowance, you would need to add the following figures onto the relevant allowance at k: in your calculation: 2017/2018

£100,000

2018/2019

£125,000

2019/2020

£150,000

2020/2021

£175,000

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37 Legal Ways To Slash Thousands Off Your Inheritance Tax Bill

Pay up or else... Whatever figure you end up with in your calculation as being your estimated Inheritance Tax bill, you should be aware that the Inheritance Tax is normally due and payable to the tax man within 6 months of death before your beneficiaries can get their hands on your stuff. I know. I’m not making this any more palatable for you.


Julie Wilson

So go on. Do your numbers If you haven’t already done so fill in the relevant calculator to see what your tax bill is likely to be. And bear in mind it’s likely to get worse. And then imagine your beneficiaries – your children or whoever, getting the tax bill. At what is generally a very difficult time anyway. It’s not pretty. And I know. Because I’ve seen it too many times.

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37 Legal Ways To Slash Thousands Off Your Inheritance Tax Bill

The only difference between a tax man and a taxidermist is that the taxidermist leaves the skin.

Mark Twain, Writer


Julie Wilson

1 Put it in a ‘Have Your Cake and Eat It’ trust (Part 1)

You can invest in a special sort of trust which allows you to ‘carve out’ some of the investment and get it back again, should your circumstances change. When you invest in the trust, it starts a seven-year clock ticking. Anything left in the trust after seven years is outside the estate for IHT purposes. Anything you’ve taken out and not spent will be taxed at 40% on death.

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YOU SAVE:

If you put £325,000 into the trust, don’t take anything out, and survive seven years, you’d save £130,000. You can gift up to the nil rate into trust but you have to survive seven years from making the gift before it’s classed as being outside of your estate for IHT purposes


Julie Wilson

2 Switch your ISA Recently the ISA (Individual Savings Account) rules changed and you can now invest ISA’s into IHT- friendly shares. Essentially, these are Alternative Investment Market (AIM) shares - businesses too small to trade on the main Stock Exchange. Yes, before the compliance police start jumping all over me, we all know these are much riskier than other mainstream shares. But so is 40% tax. If you have ISA’s and an IHT problem, a simple move to this new type of ISA can save you 40%. For me, that’s a no brainer.

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37 Legal Ways To Slash Thousands Off Your Inheritance Tax Bill

YOU SAVE:

If you transfer a £50,000 standard ISA into a new IHT-friendly ISA, you save £20,000.


Julie Wilson

3 Trust Insurance You can take out special insurance policies that pay out when Inheritance Tax is due. They don’t strictly solve the problem, because you’re still paying the tax, but at least there is some money to pay it with. But, a word of warning: many insurance sales guys over the years have sold these policies without the crucial element that makes it work – a trust. You have to put the policy proceeds in a special trust outside of your estate. Double check that any life assurance plans you’ve set up for IHT purposes have an appropriate trust wrapped around them. If not, the proceeds of the insurance will be added to your estate and taxed at 40%.

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37 Legal Ways To Slash Thousands Off Your Inheritance Tax Bill

YOU SAVE:

If you have a £100,000 trust-less policy and you wrap an appropriate trust round it, you’d save £40,000. Otherwise the proceeds of the policy are added to your estate, and that means 40% of it is off down the swanny.


Julie Wilson

4 Lost Property (Part 1) The way that property is owned can have a marked impact on Inheritance Tax (and also in paying for care fees). Many people own their properties as ‘joint tenants’, which can have a negative effect on tax planning. Changing to ‘tenants in common’, where each of the owners owns their segment separately, can be effective for tax planning purposes. Ask your independent financial adviser, or your usual lawyer.

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37 Legal Ways To Slash Thousands Off Your Inheritance Tax Bill

YOU SAVE:

If you have a property worth ÂŁ400,000 and are tenants in common, you can direct half to a trust or other beneficiaries on the first death, and could save ÂŁ80,000 (but do take advice from experts before doing this, as there can be complications).


Julie Wilson

5 Both a lender and a borrower be You set up a trust. You then make an interest-free loan to the trust which uses the loan to buy an investment bond. The trust can pay you up to 5% a year, tax-free, as repayment of the loan. If you don’t need to take the 5%, you can roll it up and access it in later years. The outstanding loan balance is subject to IHT if you die before the total loan is repaid. But the investment growth is not. After 20 years, the loan will have been repaid and the repayments stop. The full investment should then not count towards IHT as it is considered outside your estate.

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37 Legal Ways To Slash Thousands Off Your Inheritance Tax Bill

YOU SAVE:

If you put £100,000 into a gift and loan trust, and take 5% withdrawals for 20 years, you’d save £40,000. If the investment has doubled in value, you’d save another £100,000 (the growth is outside the estate for IHT purposes).


Julie Wilson

6 Keep it in the family Giving away your home and then still living in it doesn’t work for IHT purposes, as that counts as a ‘gift with reservation’. But if you move your family in, and they pay their fair share of the costs of running the home, it shouldn’t be considered as such. But then, think it through. Could you live with your family?

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37 Legal Ways To Slash Thousands Off Your Inheritance Tax Bill

YOU SAVE:

If you get this right, part or all of the family home shouldn’t be chargeable to IHT on the family home, which could save you thousands. Make sure you can live with the consequences of your IHT planning. Some solutions just aren’t worth the price you have to pay!


Julie Wilson

7 Work around the ‘You can’t give your house away’ rules

So we know that giving your house away and then still living in it doesn’t work for IHT. BUT you can give away your home and still live in it IF you pay the going rental rate to the new owners. I know - that’s a double-whammy! Not only have you given your house away, but you have to pay rent to live in it as well. But that means your capital reduces and your beneficiaries, not the Taxman, wins.

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37 Legal Ways To Slash Thousands Off Your Inheritance Tax Bill

I’d like somebody to get rid of the death tax. That’s what I want. I don’t want to get taxed just because I died. I just don’t think it’s right. If I give something to my kid, I already paid the tax. Why should I have to pay it again because I died?

Whoopi Goldberg, actress


Julie Wilson

8 Down on the farm Most farming businesses are exempt from Inheritance Tax after being held for two years or more. But watch out – ‘business’ is the key word. The Taxman has got wise to people buying farms which are really just a large house in a bit of land, and he’s put in special rules to stop this. The IHT relief you get depends on what type of farmland and buildings you have and how they are owned. Specialist advice is recommended.

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37 Legal Ways To Slash Thousands Off Your Inheritance Tax Bill

9 It’s better to give something than receive This one is often overlooked, but I think it’s a really useful exemption. You can give away unlimited amounts out of your ordinary income (not out of capital). The rules are a bit airy fairy but, in a nutshell, provided you have enough income left over to carry on with your usual lifestyle after you’ve given these amounts away, you should be fine.


Julie Wilson

YOU SAVE:

If you give £4,000 a year away out of ordinary income for 10 years, you save £16,000.

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37 Legal Ways To Slash Thousands Off Your Inheritance Tax Bill

10 It’s better to regularly give than receive You can give up to £3,000 away in each tax year, completely free of Inheritance Tax (Generous, I know!). If you don’t use the full £3,000 allowance in any tax year, you can carry forward the unused part to the next tax year. However, you can only use it after that year’s £3,000 has been fully used, and you can only do this for one year. So if you haven’t made any gifts at all one year, you can gift £6,000 in that first year. Then £3,000 each year after that.


Julie Wilson

YOU SAVE:

If you give away £3,000 for 10 years, you’d save £12,000.

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37 Legal Ways To Slash Thousands Off Your Inheritance Tax Bill

11 It’s better to give a little bit than receive You can give away up to £250 to any number of people every year.

YOU SAVE:

If you give £250 to 10 people for 10 years, you save £10,000.


Julie Wilson

12 Here comes the Bride (and Groom) Parents can give up to £5,000 to children getting married, grandparents £2,500 and anyone else can give up to £1,000.

YOU SAVE:

If you have three children and you give £5,000 to each of them on their wedding day, you save £6,000.

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37 Legal Ways To Slash Thousands Off Your Inheritance Tax Bill

13 Charity that doesn’t begin at home You can give any amount of money to a registered charity free of IHT. Even though I’m not a great supporter of giving to charity as a tax planning move (some charities are more crazy than the Government!) I’d rather you did that than let the dreaded Taxman end up with it.


Julie Wilson

14 Make a political donation Only joking! You can make an IHT-free gift to a political party, but why would you, given that we’re trying to avoid the politicians getting hold of it in the first place?

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37 Legal Ways To Slash Thousands Off Your Inheritance Tax Bill

15 It is much better to give than receive You can give any amount of cash away and provided you survive for seven years, that cash will be outside your estate for IHT purposes. This last bit causes a bit of a problem for those that don’t have a boatload of cash. And most people who save in cash deposits rarely have an IHT problem in the first place, given that cash is the worst investment you can have (But don’t get me started on that!). This is all well and good if you’re happy to gift cash to beneficiaries outright. But many people want to keep some control of that money during their lifetime. In these circumstances, you can transfer cash into a special trust for beneficiaries that you can swap and change during your lifetime (Keeps the kids in line!). If you do this, you should limit the gift to below the nil rate band (£325,000 in 2016) otherwise you’ll cop for an immediate charge to tax.


Julie Wilson

YOU SAVE:

If you gift ÂŁ325,000 into a trust and survive seven years from doing so, you save ÂŁ130,000.

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37 Legal Ways To Slash Thousands Off Your Inheritance Tax Bill

16 It is better to give twice than receive If you survive seven years after gifting a chunk of your money away into a trust, you get another bite of the cherry and can give another chunk away. Again, you need to be careful not to give away more than the nil rate band at the time, otherwise you’ll cop for an immediate charge to tax. But watch out, the Taxman is on the warpath over this one and wants to take our toys away!


Julie Wilson

YOU SAVE:

If you gift £325,000 into a trust and survive seven years from doing so, then gift another £325,000 into trust and survive another seven years, you save £260,000.

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37 Legal Ways To Slash Thousands Off Your Inheritance Tax Bill

I have issues with Inheritance Tax, particularly coming from a migrant family. My dad has worked incredibly hard all his life, so it seems odd to me that someone who has gone through that experience and has managed to save then gets taxed for dying.

Sanjeev Bhaskar, comedian


Julie Wilson

17 Get married Single people only get one £325,000 allowance, whereas married couples (and that includes civil partners) get two, doubling it up to £650,000 between them.

Make sure you can live with the consequences of your IHT planning. Some solutions just aren’t worth the price you have to pay!

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37 Legal Ways To Slash Thousands Off Your Inheritance Tax Bill

18 Lost Property (Part 2) Be careful when buying property other than your main residence. Property is a great way to accumulate wealth, but it’s lousy for tax planning. Giving away property for Inheritance Tax purposes is often scuppered by Capital Gains Tax issues, so it pays to think about who is going to own the property you are accumulating. You could, if property is your bag, put properties in your children’s or even your grandchildren’s names to avoid potential future issues.


Julie Wilson

19 Where there’s a will... If you don’t make a will, the Government decides who gets what. Most couples assume that when one of them dies, the other one automatically gets their share. Not so. It can end up with your children, or even your parents, which might be fine with you, but why trust to luck?

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37 Legal Ways To Slash Thousands Off Your Inheritance Tax Bill

20 Please release me Any loans you take out can be deducted from your estate before IHT is calculated. Equity release is a loan, secured on your home, which has to be repaid when you die. If you have an IHT problem and don’t want to move house, equity release can be the answer. But you must be careful. The interest rolls up each year and is added to the loan, which is repayable on death. If you live a long time and house prices don’t keep up with the interest, you can end up with no value in your property at all. Definitely one to seek expert advice on.


Julie Wilson

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21 Use an APT solution - Asset Protection Trust These trusts are used more to protect you against local authority attack when going into care, but they can be useful to protect your assets against a claim by a member of your family you don’t want to inherit. Again, seek specialist advice.


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37 Legal Ways To Slash Thousands Off Your Inheritance Tax Bill

22 No thanks, I don’t want my inheritance This is a right wheeze! If you have an IHT problem, and then inherit from someone, obviously the inheritance forms part of your estate and will therefore be subject to tax at 40%. But you can redirect the inheritance into a special sort of trust where you can have access to the money but it’s not counted as part of your estate. A no brainer!


Julie Wilson

23 Don’t get divorced Getting divorced could be expensive in more ways than one. Whereas married couples have £650,000 allowance between them, divorcees only have £325,000. Unless you get married again. And I’d seriously think about whether it’s worth it, if I were you!

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24 Charity that begins at death Anything you leave to a charity in your will is IHT free. Since 2012, if you leave more than one tenth of your stuff to charity, it reduces the Inheritance Tax rate from 40% to 36% on the rest of your estate. Nice one!


Julie Wilson

25 If you go down to the woods today... Buy a wood! On death, the value of the wood, i.e. the actual value of the timber the trees generate, but not the value of the land, is generally exempt from IHT.

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26 A moment in history (Admittedly, this one is not for the average Joe...) Buildings of an outstanding historic or agricultural interest might qualify for IHT relief, but you have to agree to maintain the building and make it available to the general public!


Julie Wilson

27 Start a business Most businesses that you’ve owned for more than two years will be exempt from Inheritance Tax on your death. But watch out, there are some exceptions, particularly businesses that just invest in property. Beware.

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We must end the iniquitous multi-taxing of the same money. It is not right to tax people’s incomes, then their savings on that income, to tax the movement of assets through capital gains tax, stamp duty and tax them again through Inheritance Tax if they have the audacity to die.

Liam Fox, Conservative MP


Julie Wilson

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28 Big things come in small packages You can invest in small companies on the Alternative Investment Market (AIM). These shares – the tiddlers in the pond - are deemed to be more risky than mainstream shares because a lot of small businesses fail. But you can reduce the risk by investing in a portfolio of such shares. Some will fail, some won’t, and a few will do really well. But you won’t have to pay IHT on them.


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37 Legal Ways To Slash Thousands Off Your Inheritance Tax Bill

29 Be Enterprising (EIS) Enterprise Investment Schemes (EIS) are the leastunderstood investment vehicles, but have some important tax advantages. EIS invest in small UK companies, often new business start-ups, one of the most dynamic and potentially highest-return sectors in the market. As such, they’re considered higher risk and less liquid (difficult to sell) than most investments. To encourage (bribe!) investment in this sector, generous tax advantages are available.


Julie Wilson

• EIS investments are exempt from IHT provided the investment has been held for at least two continuous years and is held at the time of death. • 30% income tax relief is available on qualifying investments. • Taxable capital gains can be ‘rolled over’ into an EIS and the capital gain that would have been payable will be deferred for the life of the investment.

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37 Legal Ways To Slash Thousands Off Your Inheritance Tax Bill

30 Half price offer Any gifts you make into trust above the current allowance (ÂŁ325,000 in 2016) will be subject to an immediate tax charge at half the rate of IHT (i.e 20% instead of 40% in 2016). If you survive seven years from making such a gift, there should be no further tax to pay. If you die within the seven years, additional tax is charged on a sliding scale.


Julie Wilson

31 Spend! Spend! Spend! Yes, just spend it. They can’t tax it if you haven’t got it. Buy a race horse or a yacht if you can (I hear they’re both a good way of leaching money!) If you want me to help you think of creative ways to get rid of it, just give me a shout!

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37 Legal Ways To Slash Thousands Off Your Inheritance Tax Bill

32 Share and share alike Husbands and wives each have their own Income Tax, Capital Gains Tax and Inheritance Tax allowances. If one of you holds most of the assets, the other one could be losing out on allowances. Gifts between spouses are generally tax free and usually give you more flexibility. And don’t worry if it comes to divorce, it doesn’t usually matter whose name the asset is actually in, all assets from all parties are taken into account.


Julie Wilson

33 Swap capital for income You can buy an annuity (i.e. swap a lump of money for an income for life). Obviously, this will reduce your estate by the lump of money you spend on it. And equally obviously, whether or not this will pay off depends on how long you are going to live. So go on then, how long are you going to live?

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37 Legal Ways To Slash Thousands Off Your Inheritance Tax Bill

34 Put it in a ‘Have Your Cake and Eat It’ trust (Part 2)

If you give away large sums of money outright, you obviously lose both access to that money, and often more importantly, the income it can generate. With a Discounted Gift Trust, your money is split into two separate ‘pots’ (This gift into trust would need to be below the nil rate band applying at the time to avoid an immediate charge to tax). The first pot provides you with an income for life. The size of this pot depends on things like your age, health, the level of income required and whether or not that income increases.


Julie Wilson

The younger and fitter you are, the bigger the size of this pot needs to be, as it will be paying out for longer. This pot will not be counted as part of your estate, so there’s no Inheritance Tax to pay on it. The second pot, what we call the ‘residual fund’, is what is left. If you die within seven years of starting the fund, tax would have to be paid on this pot. If you don’t, then all your money in the trust is safe from IHT. Brilliant! And you will continue to receive an income from the trust for the rest of your life. But obviously, with the seven year rule, you need to set up this trust in good time!

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35 Take a close look at existing stuff If you think you have everything sorted for IHT, look again! In all my years of experience, I have never found anyone who has done it themselves and got it right. I’m not trying to show off, I’m just telling you as it is. Please double check and make sure you’ve got it right, and if you’re not sure, ask a highly qualified financial adviser who specialises in this tax. I hate it when just one penny goes towards IHT that needn’t!


Julie Wilson

36 Pay family maintenance You can give assets for the maintenance of a child (or other dependent relative) to a particular type of trust IHT-free. You have to show that the amount gifted is reasonable for the purpose of maintaining the child up to age 18. But given the cost of educating and raising a kid these days, I’d imagine you’d get away with a tidy little sum.

And finally..

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37 Legal Ways To Slash Thousands Off Your Inheritance Tax Bill

37 Buy your staff a pension Payments made to buy a pension for an employee or their widow/er are exempt from IHT. Don’t look at me. I didn’t make the rules!


Julie Wilson

See? There’s no excuse for letting a single penny of the money you’ve stashed all your life end up with the Taxman – and ultimately paying for MP’s expenses and ineffective policies. Such as the failed Government project to integrate IT systems for the NHS which has so far cost the taxpayer £10 billion pounds and that cost is still rising, despite the fact that the project was abandoned in 2011. Or the latest attempt to reform the benefits system – Universal Credit – which has reportedly cost almost £425 million, which will almost certainly have to be written off.

If you believe that the Government-of-the-day will spend your money wisely when they get their hands on it – here’s something for you:

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37 Legal Ways To Slash Thousands Off Your Inheritance Tax Bill

If, on the other hand, you’d rather your own family (or even the donkey sanctuary) benefit from your lifetime’s savings, then I strongly recommend you do something about it sooner rather than later. I’ve saved literally millions of pounds for hundreds of clients and their families. If you want to join this growing band, I suggest you stop faffing around and arrange a chat with a qualified independent financial adviser.


Julie Wilson

Here’s what a couple of clients have to say:

“Thank you for all the advice you gave me just at the right time. Everything is in place and the whole family is financially sound and settled. This couldn’t have happened without your very well timed intervention and I can’t thank you enough.” Mrs J Hunsley, Newcastle

“Much of my tranquil state of mind is due to the help I received from Julie Wilson of Pen-Life when I first decided to come to the Queen Alexandra’s Hospital Home.” Mr Don Dean, Worthing

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37 Legal Ways To Slash Thousands Off Your Inheritance Tax Bill

For a FREE no nonsense chat, call now 0800 107 2178 Pen-Life Chartered Financial Planners Ltd, Tudor Court, Opus Avenue, York YO26 6RS Tel: 0800 107 2178 Fax: 01904 466206 Email: helen@pen-life.co.uk Web: www.pen-life.co.uk Authorised and regulated by the Financial Conduct Authority, Number 212972. Inheritance Tax rates, limits and allowances frequently change. The information in this book relates to 2016/17. If you’d like current rates and allowances, simply call 0800 1072178 and ask for our current IHT Fact Sheet.


Julie Wilson

Notes: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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Notes: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .


Julie Wilson

Notes: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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Inheritance Tax is a voluntary levy paid by those whose distrust their heirs more than they dislike the Inland Revenue The late Roy Jenkins, MP, 1986 ÂŁ5.99 For a FREE no nonsense chat, call now 0800 1072178 Pen-Life Chartered Financial Planners Ltd. Tudor Court, Opus Avenue, York, YO26 6RS

Julie Wilson's 37 Legal Ways to Slash £Thousands Off Your Inheritance Tax Bill  
Julie Wilson's 37 Legal Ways to Slash £Thousands Off Your Inheritance Tax Bill  
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