How do you fancy getting a 40% discount on a dream holiday, home extension or boat?
Most weeks, this column urges readers to save and invest, but a change is as good as a rest. So here is a financial incentive to have some fun instead.
My old friend Alan Steel, ……, says the purpose of effective investment is to be able to afford to fly business class even after you have retired.
He should know, having just returned from yet another jaunt — this time to Australia. Steel points out that many readers of The Sunday Times will have wealth far in excess of £325,000, the threshold beyond which inheritance tax (IHT) bites at 40%.
As this includes your home — albeit after an additional main residence allowance of £125,000 in the current tax year — that means many folk who have been basic-rate taxpayers all their lives will be paying higher-rate tax for the first time after they die.
As Steel said: “Now that HM Revenue & Customs [HMRC] is collecting more than £5bn a year from IHT, anything that jolts wealthy folk out of their inertia on financial planning has to make sense.”
If — like another Scottish multimillionaire, Andrew Carnegie — you think it is a bit dim to aim to be the richest stiff in the graveyard, it makes even less sense to become a higher-rate taxpayer posthumously.
Alternatively, spending some of your wealth now means that HMRC will in effect subsidise 40% of your expenditure on whatever you like.
Your kids may not thank you, or me , for this way of looking at things — but whose money is it anyway?
Quote courtesy of The Sunday Times
Sunday 29 April 2018