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Inheritance Tax Is Catching More People — Here's How to Fight Back · Merryn Talks Money

• 0:02
  Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. Welcome to Merrin Talks
• 0:18
  Speaker 1: Your Money, the personal finance edition of Merrin Talks Money.
• 0:22
  Speaker 1: In these bonus podcasts, we talk about the best strategies
• 0:24
  Speaker 1: to making the most of your money.
• 0:26
  Speaker 2: I'm marrin Sumset.
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  Speaker 3: Web and I'm joined Davie Senior, reported Bloomberg and author
• 0:30
  Speaker 3: is the Money Distilled newsletter.
• 0:36
  Speaker 2: We are talking inheritance tax again.
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  Speaker 4: Now.
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  Speaker 1: Whenever we do a mail back episode, questions about inheritance
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  Speaker 1: tax absolutely for blood in.
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  Speaker 2: It is absolutely top of.
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  Speaker 1: A lot of our listeners minds, and of course it's
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  Speaker 1: endlessly covered in the media as well.
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  Speaker 2: So today we are looking at it again and we are.
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  Speaker 1: Going to focus on the thing that I know you
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  Speaker 1: really care about, which is how to pay less of it.
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  Speaker 1: So I've got on a guest to help us that
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  Speaker 1: with the technical bit. So joining us today is Rob May.
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  Speaker 1: Rober is a trust and a state practitioner who os
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  Speaker 1: expert IHD planning advice to high net worth clients. Here
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  Speaker 1: is the executive director of Life and Inherance Tax at
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  Speaker 1: SPF Private Clients. Robert, thank you, thank you for joining
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  Speaker 1: us today.
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  Speaker 4: Oh you're very very welcome. Mary and it's great to
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  Speaker 4: be here today.
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  Speaker 1: All right, Now let's start off by talking about well
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  Speaker 1: in meritive sex of course, but not that many people
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  Speaker 1: actually end up paying it, right, I mean there's a
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  Speaker 1: system of allowances that means that most people are not
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  Speaker 1: going to pay it.
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  Speaker 4: Yeah.
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  Speaker 5: Absolutely, so, I mean, every individual, doesn't matter where you are,
• 1:39
  Speaker 5: has a newwork band.
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  Speaker 4: Allowance of three hundred and twenty five thousand.
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  Speaker 5: Dependent on how much wealth you have as well, you
• 1:46
  Speaker 5: might benefit from the additional residents newwork band of up
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  Speaker 5: to one hundred and seventy five k, So potentially each
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  Speaker 5: individual could have up to half a million allowance.
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  Speaker 4: And of course if you're married or civil.
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  Speaker 5: Partners, then potentially means that between you both you've got
• 2:02
  Speaker 5: a up to a million inheritance SAT through.
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  Speaker 2: Yeah, but then so that might work for you.
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  Speaker 1: Even then of course, if you don't have you don't
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  Speaker 1: have a family home that you can said against it,
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  Speaker 1: or haven't had one that you downsized for a recently,
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  Speaker 1: you may not get that allowance. So that may if
• 2:15
  Speaker 1: you always rented, for example, if you saw on a
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  Speaker 1: long time ago, you may not get that full amount.
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  Speaker 1: You'll just get the through twenty five absolutely and then
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  Speaker 1: of course says this this thing that I don't think
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  Speaker 1: quite enough people really understand, which is that if your
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  Speaker 1: state is worth over two million, that allowance starts to disappear,
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  Speaker 1: right And how does that work?
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  Speaker 5: Yeah, absolutely, so it's kind of it takes down one
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  Speaker 5: pound for every two pound over then over the two
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  Speaker 5: million effectively, So if you're a state, if you're an
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  Speaker 5: individual and your state is valued at two point three
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  Speaker 5: five million, you won't have any of that additional residence
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  Speaker 5: noway brand allowance. And if you're a married couple or
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  Speaker 5: civil partners and your state's over two point seven million,
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  Speaker 5: then you again won't have any of that additional allowance.
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  Speaker 5: So that's when it goes straight back down to the.
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  Speaker 1: Three two five, okay, but the three two five never
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  Speaker 1: gets taken away.
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  Speaker 2: Everyone gets the three two five regardless.
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  Speaker 4: Everyone gets a three two five regardless.
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  Speaker 5: And just to be complete, you know, sometimes people make
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  Speaker 5: gifts during their lifetime and that might eat into that allowance,
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  Speaker 5: but it should then in theory reset every seven years.
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  Speaker 1: If those gifts break the seven year role exactly. So
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  Speaker 1: if you gave up at the moneyway five years ago,
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  Speaker 1: three years ago, to years go, whatever, it.
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  Speaker 5: Exactly Yeah, so as long as you're seven years after
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  Speaker 5: making gifts, if it's eaten into that three T five allowance,
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  Speaker 5: it should be available.
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  Speaker 1: Okay, So if we're talking about a single person who's
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  Speaker 1: maybe rented, that's all they get three two five. So
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  Speaker 1: maybe as the more people will be putting inheritance sakes
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  Speaker 1: than we think.
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  Speaker 4: Absolutely.
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  Speaker 5: I mean, if we look at the last few years
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  Speaker 5: in particular, or perhaps consistently over many years, you know,
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  Speaker 5: inheritance tax receipt by HMRC have just kept going up
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  Speaker 5: and up. And that's simply because you know that nearway
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  Speaker 5: band or three two five allowance just hasn't changed, hasn't
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  Speaker 5: been adjusted for inflation. Means that lots more people are
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  Speaker 5: getting called by it. And as I'm sure we'll come
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  Speaker 5: on to a little bit later, because of other changes
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  Speaker 5: that have happened in more recent times around inheritance tax,
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  Speaker 5: even more people will be captured in the not to
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  Speaker 5: distant future, if not already.
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  Speaker 1: Okay, so let's start with the absolutely best way to
• 4:15
  Speaker 1: avoid inheritance tax, which is to spend all your money
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  Speaker 1: and to die broken. And as we often say on
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  Speaker 1: the show, the around her pockets in this shroud. So
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  Speaker 1: just get out there and spend that money.
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  Speaker 2: That's the best way out right, absolutely, lerk.
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  Speaker 4: The simplest form is do as much as you can
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  Speaker 4: to spend.
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  Speaker 5: It all if you know, or at least get under
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  Speaker 5: those allowances so that you don't have any inheritance tax
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  Speaker 5: to pay.
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  Speaker 4: Absolutely, that's the best way.
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  Speaker 1: Okay, So we're encouraging that. And that's also, by the way, everybody,
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  Speaker 1: very good for the economy. Not good for your kids,
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  Speaker 1: but great for the economy. So if we really encourage that,
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  Speaker 1: get rid of those savings, get rid of everything, sell
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  Speaker 1: that house. I know it's not the best time, by
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  Speaker 1: the way, ben get out and spend go on holiday.
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  Speaker 1: Maybe oh no, you can't jet feel go on holiday
• 4:55
  Speaker 1: in the UK right now? Assuming that you can't do that,
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  Speaker 1: or that you too no to do that, you can't
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  Speaker 1: quite bring yourself to get rid of all your money,
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  Speaker 1: maybe you have too money. And anyway, who knows when
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  Speaker 1: they're going to die, etcetera. So one way or another,
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  Speaker 1: you're going to die within a state worth over five
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  Speaker 1: hundred thousand, over a million, whatever it is, depending on
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  Speaker 1: where it kicks in. What's the next best way to
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  Speaker 1: avoid inheritance tax?
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  Speaker 5: I'm going to be a little bit biased here because,
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  Speaker 5: of course, so I focused on insurance solutions as the
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  Speaker 5: as a solution to inheritance tax planker re clients. So
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  Speaker 5: you know, well, wouldn't this is so best? Because of
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  Speaker 5: course it all depends on individual circumstances. But I think
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  Speaker 5: certainly the simplest form of then dealing with that inheritance
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  Speaker 5: tax exposure is to is to ensure against it.
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  Speaker 2: So I thought you were going to say deathbed marriage.
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  Speaker 5: Yeah, well, I mean, if yeah, you're you're quite right.
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  Speaker 5: I mean, if you're not married, absolutely get married. Make
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  Speaker 5: sure you benefit from the spouse exemption. But assuming you're
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  Speaker 5: already married.
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  Speaker 2: This bit of the show is aimed.
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  Speaker 1: It's squarely at my mother by the way you're listening them,
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  Speaker 1: she's away asking me how to avoid inheritance tax and
• 6:01
  Speaker 1: remarried my dad.
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  Speaker 2: How bad can it be?
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  Speaker 5: Yeah, absolutely, that's definitely definitely getting married or actually, you know,
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  Speaker 5: you raise an important point there in some people don't
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  Speaker 5: have their wills up to date, right, So absolutely, no
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  Speaker 5: matter what you do around planeting, absolutely make sure that
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  Speaker 5: you've got your will in place, particularly if.
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  Speaker 4: You're in a married.
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  Speaker 5: Couple or civil partnership, because it's not automatic that everything
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  Speaker 5: goes to your spouse or civil partner. So making sure
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  Speaker 5: that you have those wills set up on that basis
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  Speaker 5: means that you can guarantee that you've got that spouse exemption.
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  Speaker 5: So everything from an inheritance tax perspective is hopefully deferred
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  Speaker 5: until a second second death of both people.
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  Speaker 1: Okay, excellent, So first bendedal, second deathbed marriage. And further
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  Speaker 1: one that you're biased towards, which is insurance insurance.
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  Speaker 5: Tell us how that w was, Yeah, for sure. So
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  Speaker 5: there's broadly two forms of life insurance that can be
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  Speaker 5: used for inheritance tax planning. So you've got a term
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  Speaker 5: life insurance policy so a bit like the name suggests,
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  Speaker 5: it lasts for a specified period. You can use it
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  Speaker 5: in various different ways, in various different circumstances to then
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  Speaker 5: mitigate that inheritance tax risk, as I said, for a
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  Speaker 5: specific period. So probably the most common form that it's
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  Speaker 5: used for. A common planning solution that it's used for
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  Speaker 5: is when people do gift assets during their lifetime. So
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  Speaker 5: to the extent that someone's gifted assets and it's above
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  Speaker 5: any of their allowances and reliefs and things, then they've
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  Speaker 5: got a seven year exposure for an inheritance tax liability
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  Speaker 5: to arise if they die within that period, So you
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  Speaker 5: can set up a very specific seven year policy that
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  Speaker 5: will match that tax exposure during that period and therefore
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  Speaker 5: mean that if the worst does happen, death does arise
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  Speaker 5: and therefore it triggers a tax liability. Ultimately, the funds
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  Speaker 5: are available to then fund that tax tax liability for
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  Speaker 5: the beneficiaries of the gifts. So that's a common way.
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  Speaker 5: I mean term insurance also utilized more as a deferral mechanism.
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  Speaker 5: So maybe you've got clients that are looking at potentially
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  Speaker 5: a time horizon within which maybe they will gift to children,
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  Speaker 5: but the children are too young for them to do
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  Speaker 5: so at this stage, and so they perhaps wanting to
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  Speaker 5: see how life pans out a little bit before they
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  Speaker 5: feel comfortable gifting sizeable assets to children. So you can
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  Speaker 5: maybe look at ten, fifteen, twenty years, whatever the term
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  Speaker 5: needs to be, but you can arrange it all the
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  Speaker 5: way up to age ninety expiry, so protecting any kind
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  Speaker 5: of period in between that to mitigate that tax exposure.
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  Speaker 5: The other solution is whole of life. So again a
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  Speaker 5: bit like the name suggests it doesn't have an end date.
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  Speaker 5: It lasts forever. So you know, if you're an individual married,
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  Speaker 5: it just lasts until you die. If you're a married
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  Speaker 5: couple or in civil partnership, it can last until the
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  Speaker 5: second if you die.
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  Speaker 4: So ultimately to time.
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  Speaker 5: The payout when the death arises and when when tax
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  Speaker 5: liabilities ultimately arise.
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  Speaker 1: Okay, so that sounds expensive. Let's let's just look at
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  Speaker 1: these different types. So let's say I'm buying the seven
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  Speaker 1: year one. Let's say the sake of ab I've given
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  Speaker 1: one of my ungrateful children half a million quid and
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  Speaker 1: I'm worried that I won't make it through the next
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  Speaker 1: seven years, and I want to ensure against that.
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  Speaker 2: What's that going to cost me?
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  Speaker 5: You're, say age sixty, and I still work in percentages,
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  Speaker 5: So if you're age sixty, the total costs that you
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  Speaker 5: might pay towards that life insurance policy is probably no
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  Speaker 5: more than zero point six percent of the.
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  Speaker 4: Value of the gift that you have made.
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  Speaker 5: So if you compare that to the fact that in
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  Speaker 5: the first three years of that period of seven years,
• 9:44
  Speaker 5: you've got a potentially forty percent tax exposure. Yeah, yeah,
• 9:48
  Speaker 5: you're locking in a total effective tax cost of point
• 9:51
  Speaker 5: six percent versus a potential tax risk of forty percent
• 9:55
  Speaker 5: if I'm sixty.
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  Speaker 2: But am I going to have to have a medical
• 9:57
  Speaker 2: for that?
• 9:58
  Speaker 5: Rob? I don't want a medical if you don't in medical.
• 10:01
  Speaker 5: It depends on the depends on the sums that you
• 10:03
  Speaker 5: need ultimately, right, Yeah, there are there are circumstances where
• 10:06
  Speaker 5: if you're looking at smaller sums dependent on age, you
• 10:09
  Speaker 5: won't need a medical exam full stop. It's a common
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  Speaker 5: thing that comes up in the conversations I have with clients,
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  Speaker 5: So you know obviously that that kind of concern around
• 10:17
  Speaker 5: needing to go through a medical exam. What I find
• 10:20
  Speaker 5: is that once you've spoken to someone a little bit
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  Speaker 5: about how what's involved with it, actually they get a
• 10:25
  Speaker 5: little bit more comfortable with it. Of Course, you know,
• 10:28
  Speaker 5: there could be circumstances though, where people are simply just
• 10:32
  Speaker 5: not in very good health and therefore insurance isn't available
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  Speaker 5: to them. So that's really key to keep key to
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  Speaker 5: stress as well, because it works very well, but it's
• 10:41
  Speaker 5: not available to everyone.
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  Speaker 1: Right, Okay, so zero point six percent if I'm sixty,
• 10:46
  Speaker 1: how much more if I'm seventy.
• 10:47
  Speaker 4: If you're seventy you're probably looking at about one point eight.
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  Speaker 2: Percent assuming you're in good health.
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  Speaker 5: Assuming it's doing good health, yeah, absolutely, And if you're
• 10:56
  Speaker 5: up to age eighty, you're probably looking at about six
• 10:58
  Speaker 5: percent roughly.
• 11:00
  Speaker 1: Okay, So that's it's not bad, is it relative to
• 11:03
  Speaker 1: paying the tax? Yeah?
• 11:05
  Speaker 5: Relative to the tax liability, absolutely, And I think you
• 11:08
  Speaker 5: know to stress on the point around health as well. Yes,
• 11:11
  Speaker 5: not everyone is going to get that rate, okay, you know,
• 11:15
  Speaker 5: particularly if you're a smoker and things as well. It
• 11:18
  Speaker 5: impacts the premium substantially. But I think the key kind
• 11:21
  Speaker 5: of starting point that I always have with clients is
• 11:24
  Speaker 5: that if that's the starting place, is the best case scenario,
• 11:28
  Speaker 5: even for clients that aren't in perfect health, you know,
• 11:31
  Speaker 5: maybe there are some medical concerns that lead to them
• 11:33
  Speaker 5: having a higher premium than the standard premium, then it's
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  Speaker 5: still potentially a very cost effective way of of mitigating
• 11:41
  Speaker 5: that tax exposure over the seven year period.
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  Speaker 2: Right prices.
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  Speaker 1: Then for the longer term stuff, If I'm seventy five, yeah,
• 12:06
  Speaker 1: and I want a whole of life insurance for my estate, again,
• 12:11
  Speaker 1: that was that come as a percentage, an annual percentage
• 12:14
  Speaker 1: or an upfront percentage.
• 12:16
  Speaker 4: Roughly, Yeah, I can give you a rough steer.
• 12:19
  Speaker 5: I mean what I do is i'll give you I'll
• 12:20
  Speaker 5: give you it based on an age of seventy because
• 12:22
  Speaker 5: that's what I've got to bland in my brain. So
• 12:25
  Speaker 5: if you're if you're a single seventy year old, and
• 12:28
  Speaker 5: you say wanted a million pounds of whole of life insurance,
• 12:32
  Speaker 5: you'd be.
• 12:33
  Speaker 1: A million pounds is the value of my estate as
• 12:35
  Speaker 1: opposed to the expected value of the tax.
• 12:38
  Speaker 5: A million is the value of the tax. So you're
• 12:40
  Speaker 5: when you're insuring with the life insurance solution, you're always
• 12:43
  Speaker 5: ensuring the tax liability as opposed to the value of
• 12:46
  Speaker 5: your estate. So and you can pretty much, you know,
• 12:49
  Speaker 5: look at pro rata figures for lower sums. So if
• 12:52
  Speaker 5: we said you only wanted one hundred thousand, okay, of
• 12:56
  Speaker 5: whole of life insurance, you're probably looking at about something
• 12:59
  Speaker 5: like three third pounds a year for a whole of
• 13:01
  Speaker 5: life insurance policy at age seventy for an individual. Okay,
• 13:06
  Speaker 5: if you were married and you were both age seventy,
• 13:10
  Speaker 5: you'd be looking at about maybe two to two and
• 13:13
  Speaker 5: a half thousand.
• 13:14
  Speaker 4: Pounds a year.
• 13:16
  Speaker 1: So you have to you have to take some careful
• 13:18
  Speaker 1: thinking about how long you think you might live and
• 13:20
  Speaker 1: whether you're better off doing that or whether you're better
• 13:22
  Speaker 1: off putting the same amount of money into a savings
• 13:24
  Speaker 1: account and telling a children of designated AVIHD you there's
• 13:28
  Speaker 1: some thinking to do.
• 13:29
  Speaker 5: Around it, absolutely, but you also make a really interesting
• 13:32
  Speaker 5: observation there. So when we're having conversations with clients around
• 13:36
  Speaker 5: whole of life insurance, you know naturally that that thought
• 13:39
  Speaker 5: process goes into well, okay, well if I didn't pay
• 13:42
  Speaker 5: these insurance premiums and instead I invested the money or
• 13:45
  Speaker 5: put it into a savings product, Yeah, yeah, what's the
• 13:48
  Speaker 5: difference in the outcome?
• 13:49
  Speaker 4: Okay?
• 13:50
  Speaker 5: But there's a there's a big thing that people sometimes
• 13:52
  Speaker 5: overlook when they're making that comparison, which is that if
• 13:55
  Speaker 5: you're investing your money or if you're putting it into
• 13:58
  Speaker 5: a savings product, ultimately whatever that amount grows to over
• 14:02
  Speaker 5: your lifetime is itself going to be subject to inheritance tax. Right,
• 14:07
  Speaker 5: so you're going to have forty percent of that not
• 14:09
  Speaker 5: toss straight away on death, Whereas with life insurance, key
• 14:13
  Speaker 5: thing that we're not yet covered. But it's really important
• 14:16
  Speaker 5: that policies are held in trust or structured into a
• 14:18
  Speaker 5: trust once that policy is in place, which very straightforward
• 14:22
  Speaker 5: to do. All insurance companies provide their own standard documents
• 14:25
  Speaker 5: or your lawyer can can help with that. But the
• 14:28
  Speaker 5: proceeds of the life insurance policy are paid outside of
• 14:31
  Speaker 5: the estate, so when you're comparing one versus the other,
• 14:35
  Speaker 5: actually you've got to save it or invest and achieve
• 14:38
  Speaker 5: a growth rate an awful lot higher to get to
• 14:41
  Speaker 5: the same net position as your whole life policy pays out.
• 14:44
  Speaker 4: If that makes sense.
• 14:46
  Speaker 1: It does, and so that the trust that you put
• 14:48
  Speaker 1: that the insurance money into is not an individual trust,
• 14:52
  Speaker 1: so it was not subject to the ten year rule.
• 14:56
  Speaker 5: We could get very into the weeds on this, but
• 14:58
  Speaker 5: in theory there should be no ten yearly charges online
• 15:03
  Speaker 5: insurance trust. You've got to if you're looking at really
• 15:06
  Speaker 5: big numbers and big premiums, you've got to do some
• 15:08
  Speaker 5: careful planning and structuring around that.
• 15:10
  Speaker 4: But it's it's easy to mitigate.
• 15:12
  Speaker 2: That's a really interesting point.
• 15:14
  Speaker 3: Ha ha, John, Yes, did you have a question make
• 15:18
  Speaker 3: a picture level because I know that you're sort of
• 15:20
  Speaker 3: just specializing insurance, but is this making Yeah, are these
• 15:24
  Speaker 3: changes that are coming up to pensions basically good for
• 15:27
  Speaker 3: your business.
• 15:33
  Speaker 4: It does.
• 15:33
  Speaker 5: Yeah, you've hit the nail on the head, John. I mean, look,
• 15:36
  Speaker 5: not not not only the pension changes. You know, some
• 15:40
  Speaker 5: people that are listening impacts might have been or at
• 15:43
  Speaker 5: least have seen in the news all of the changes
• 15:44
  Speaker 5: impacting farmers sadly and the business owners which kicked in
• 15:48
  Speaker 5: from this six April just gone prior to that. You know,
• 15:52
  Speaker 5: for those that were interested, they might have seen all
• 15:56
  Speaker 5: the headlines around non doms leaving the UK, for example,
• 16:00
  Speaker 5: So that was the that was the previous April where
• 16:02
  Speaker 5: there were some you know, big changes to inheritance tax.
• 16:05
  Speaker 5: So yes, all of these changes do do help certainly
• 16:10
  Speaker 5: our business from from a life insurance perspective, you know, unfortunately,
• 16:15
  Speaker 5: certainly in terms of business relief, agriculturally changes and pension
• 16:20
  Speaker 5: changes coming next year. You know, these are these are
• 16:23
  Speaker 5: impacting people that have never probably had to think about
• 16:26
  Speaker 5: inheritance tax. So I don't you know, I don't I
• 16:29
  Speaker 5: don't forget the fact that it's you know, it's it's
• 16:31
  Speaker 5: really difficult for people to to to suddenly now get
• 16:35
  Speaker 5: their heads around having to deal with this potential tax
• 16:38
  Speaker 5: issue on the horizon. But hopefully, you know, not just
• 16:43
  Speaker 5: with life insurance, but there are planning you know, there
• 16:46
  Speaker 5: are planning opportunities out there still. With good advice, people
• 16:50
  Speaker 5: can still you know, spend it or do other things
• 16:52
  Speaker 5: to to you know, to to sort of mitigate.
• 16:54
  Speaker 4: That tax exposure.
• 16:56
  Speaker 5: But but yeah, I think I think life insurance has
• 16:58
  Speaker 5: certainly become signific to be more in demand over the
• 17:02
  Speaker 5: last couple of years compared to the previous what we're
• 17:06
  Speaker 5: talking twelve or thirteen years in my career before that,
• 17:09
  Speaker 5: where it was always the thing that I focused on.
• 17:11
  Speaker 5: It was always in demand, but just not at all
• 17:14
  Speaker 5: in as much demand as it is today.
• 17:17
  Speaker 3: When they changed the rules in the Nine Doms and
• 17:19
  Speaker 3: they changed it to ten years, so that you know,
• 17:22
  Speaker 3: the inheritance tax they have to be in hurdance tax
• 17:25
  Speaker 3: after ten years, but they can also made it that
• 17:28
  Speaker 3: if you leave the UK and you're out of the
• 17:31
  Speaker 3: UK for ten years, you should no longer fall the
• 17:34
  Speaker 3: inheritance tax. Is that correct, because in the old days
• 17:37
  Speaker 3: there was just no clarity on that. It didn't matter
• 17:40
  Speaker 3: when you moved away from the UK, you were still
• 17:43
  Speaker 3: inheritance tax liable.
• 17:45
  Speaker 5: Yeah, so so it was slightly I mean the old
• 17:47
  Speaker 5: rules were slightly less less clear, as you say, because
• 17:51
  Speaker 5: there was there was a concept of domicile that played
• 17:54
  Speaker 5: played a role in it. But actually the old rules
• 17:57
  Speaker 5: did still have a cutoff point. So the elder rules
• 18:00
  Speaker 5: effectively were if you had spent fifteen out of the
• 18:03
  Speaker 5: last twenty tax years as a UK resident tax resident,
• 18:08
  Speaker 5: you would be caught on a worldwide basis to inheritance tax.
• 18:11
  Speaker 5: What was the real fundamental shift that maybe some people
• 18:15
  Speaker 5: wouldn't have picked up is the fact that what people
• 18:18
  Speaker 5: could do pre six April twenty twenty five is settle
• 18:21
  Speaker 5: all of their assets offshore into and off your trust
• 18:24
  Speaker 5: and that would then be ring fenced for an inheritance
• 18:26
  Speaker 5: tax perspective in that So that's the fundamental shift beyond
• 18:31
  Speaker 5: just a residency point. That's the fundamental shift that happened
• 18:34
  Speaker 5: in April twenty twenty five. So people can't do that
• 18:37
  Speaker 5: planning now that they could do before. And then to
• 18:42
  Speaker 5: add to the fact that they've lost five years effectively
• 18:45
  Speaker 5: of tax residents, so once they've been here for ten
• 18:47
  Speaker 5: now they've got that worldwide exposure. So what we're finding
• 18:50
  Speaker 5: a lot of clients doing in that respect is you know, well,
• 18:54
  Speaker 5: as you have seen, you know, people have already left
• 18:56
  Speaker 5: the UK and have gone to places like Italy, places
• 18:59
  Speaker 5: like and the like, you know, places at are low
• 19:02
  Speaker 5: tax jurisdictions or offering offering alternative favorable tax tax regimes
• 19:09
  Speaker 5: to people. All people were of course not yet at
• 19:12
  Speaker 5: that tenure point, and perhaps we'll just stay here for
• 19:15
  Speaker 5: up to ten years before they before they leave, you know,
• 19:18
  Speaker 5: and perhaps within that timeframe they've they've scratched their itch
• 19:22
  Speaker 5: as far as the UK is concerned, or maybe they've
• 19:24
  Speaker 5: dealt with what they needed to do with whilst being
• 19:27
  Speaker 5: here in terms of career, business, etc. And again, not
• 19:31
  Speaker 5: to labor the point too much today because it's going
• 19:34
  Speaker 5: to come up as a common theme of course, but
• 19:37
  Speaker 5: you know, we also do get quite a lot of
• 19:38
  Speaker 5: clients interested in insurance to then protect that tax exposure
• 19:42
  Speaker 5: because you know, instead instead of believe in the UK,
• 19:46
  Speaker 5: what some people have done is say, well, you know,
• 19:49
  Speaker 5: I'm going to be in the UK for another five, ten,
• 19:51
  Speaker 5: fifteen years, whatever it might be. I will definitely leave,
• 19:55
  Speaker 5: but I just I'm not ready to leave yet. Maybe
• 19:57
  Speaker 5: I've got my children in school, or you know, maybe
• 19:59
  Speaker 5: my business is still growing things. So that's where the
• 20:02
  Speaker 5: term insurance solution I talked about earlier works quite well
• 20:06
  Speaker 5: for them because it just defers that position for them.
• 20:09
  Speaker 5: You know, it's not a silver bullet by any stretch,
• 20:11
  Speaker 5: because you know, some clients have got quite substantial levels
• 20:15
  Speaker 5: of wealth and the insurance solution won't necessarily keep up
• 20:18
  Speaker 5: with that because more often than not we set in
• 20:20
  Speaker 5: place of set life insurance. Some but their tax exposure
• 20:25
  Speaker 5: might keep increasing over time, so you know, we have
• 20:28
  Speaker 5: to revisit it, you know, on a periodic basis. But
• 20:32
  Speaker 5: it at least gives them some piece of mind to
• 20:34
  Speaker 5: maybe remain in the UK without feeling like they've got
• 20:37
  Speaker 5: this huge, huge tax clouds from an inheritance tax hanging
• 20:41
  Speaker 5: over them.
• 20:41
  Speaker 3: Because I was just one on the flip side. Is
• 20:43
  Speaker 3: there anything here that's changed the calculus for if you're
• 20:46
  Speaker 3: like normal UK residence to make sure that they try
• 20:50
  Speaker 3: and retire abroad ten years before they die.
• 20:52
  Speaker 5: I mean, that's one of the benefits really of the
• 20:54
  Speaker 5: regime that perhaps didn't really get the same level of
• 20:57
  Speaker 5: press attention than the negative. It's right, but you know,
• 21:01
  Speaker 5: the expac community now has has an opportunity to plan
• 21:05
  Speaker 5: for inheritance tax in a way that they never did previously.
• 21:09
  Speaker 5: So you know, as you say, if they've lived outside
• 21:11
  Speaker 5: the UK for more than ten ten tax years in
• 21:14
  Speaker 5: the last twenty, then you know that they're outside of
• 21:18
  Speaker 5: the tax tax net from an inheritance tax perspective on
• 21:21
  Speaker 5: their non UK set base, so as long as they're
• 21:23
  Speaker 5: taking everything outside the UK. So yeah, absolutely it's it.
• 21:28
  Speaker 5: But it does obviously what you can't do unfortunately, otherwise
• 21:32
  Speaker 5: we'd all be able to plan perfectly is understand or
• 21:35
  Speaker 5: time when you when your death is going to rise sadly,
• 21:38
  Speaker 5: so you know that's the one thing that still perhaps
• 21:41
  Speaker 5: is there is where the insurance solution maybe.
• 21:44
  Speaker 4: Has a role to play.
• 21:45
  Speaker 5: Yeah.
• 21:45
  Speaker 3: Absolutely. I just think it's interesting because no, I guess no,
• 21:48
  Speaker 3: that ten years is quite close to the seven years
• 21:50
  Speaker 3: for the gift A loans, So if you were thinking
• 21:53
  Speaker 3: the retire and abroad, then there's an element. Oh well,
• 21:55
  Speaker 3: we may as well just do it as quite as
• 21:56
  Speaker 3: we can so that we can get the HT clock
• 22:00
  Speaker 3: running on that. But yeah, also that was just it
• 22:03
  Speaker 3: was just something that was curious about. So I wenterful
• 22:06
  Speaker 3: just going to get lots of more expert pensions as
• 22:08
  Speaker 3: a result of this.
• 22:10
  Speaker 2: Yeah, where are you going to move to young to
• 22:12
  Speaker 2: avoid your.
• 22:12
  Speaker 3: H I mean, I'm very kind to find the port school. Historically,
• 22:19
  Speaker 3: I'm getting quite formed of grease and I'm just you know,
• 22:23
  Speaker 3: I'm kinda gonna need to think about my options here
• 22:26
  Speaker 3: and maybe go long haul.
• 22:29
  Speaker 2: Yeah, Rob, where are you going? What would you recommend?
• 22:32
  Speaker 5: So I've got I've got international connections, I guess in
• 22:35
  Speaker 5: terms of my work in Columbia. You know, some of
• 22:40
  Speaker 5: some of that side of the family live in Costa Rica.
• 22:42
  Speaker 5: So maybe I'll end up in in Costa Rica one day.
• 22:46
  Speaker 5: That was definitely definitely on the cards at one point.
• 22:49
  Speaker 5: We'll see how it goes and things.
• 22:52
  Speaker 2: How's your Spanish? Rob, Costa Rica?
• 23:00
  Speaker 4: It is?
• 23:00
  Speaker 2: So there you go, everybody.
• 23:02
  Speaker 1: One spend all your money to marry on your deathbed,
• 23:06
  Speaker 1: three get insurance, and four moved to Costa Rica.
• 23:11
  Speaker 2: Rob, thank you very much for joining us today.
• 23:13
  Speaker 4: That's all right, no pleasure. Thanks so much for having me.
• 23:21
  Speaker 2: Thanks for listening to this week's Maren Talk to Your Money.
• 23:23
  Speaker 1: If you like, I'll show, rate, review and subscribe wherever
• 23:25
  Speaker 1: you listen to your podcast. Also, have you showed Follow
• 23:27
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• 23:30
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• 23:33
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• 23:37
  Speaker 4: On for me, all right?
• 23:38
  Speaker 2: Find Rob on LinkedIn.
• 23:41
  Speaker 1: This episode was produced by some Sadi Moses and and
• 23:44
  Speaker 1: Jennifer Seely. Questions and comments on this show and all
• 23:46
  Speaker 1: our shows always welcome. Our show email is Merry Money
• 23:49
  Speaker 1: at Bloomberg dot Net. Special thanks to Rob May