- We're collating the feedback from Protection Review 2014 and reading all of the comments we have received after the conference, dinner and awards
- We're planning the annual advisory board meeting for The Syndicate where we will meet with members old and new to discuss the themes for the research over the coming year.
- Product reviews. We have a track record going back almost 20 years and are building up our online library - it's free to access too.
It must be political party conference season again… or maybe there is an election looming? How can we tell? Well, there is the array of unfortunate photos of party leaders on the front pages looking like competitors in some kind of ‘gurning’ competition, but there is also a lot of ‘news’ regarding Inheritance Tax (IHT).
IHT is a political weapon that punches above its weight when it comes to creating headlines, but also in nudging the political agenda this way and that – I recall vividly when the £1m level was first floated back in 2007, it was enough to force Gordon Brown to rethink plans for a snap election. I also recall my early days as a protection product manager, dreaming up ways to get our salesforce to offer valuable protection cover to more of their clients. Similar debates raged at this time of year or around the Budget back then about the fairness of the tax, or indeed its effectiveness at raising money.
Throughout all of this, the one thought that always seemed very obvious to me, and still does, is that anyone can avoid paying IHT, with a small amount of planning, by giving the money away in life rather than death or by putting in place some mitigating cover such as life insurance. I can’t imagine that is news to anyone reading this, but as someone who is less close to the protection market than I used to be, the more you think about it, the more annoyed you get that complexities that get woven into this subject area make it hard for people to access this important tax planning facility.
The Government’s decision to freeze the Inheritance Tax (IHT) threshold at £325,000 until 2017/18 has resulted in an increasing number of people finding that they fall into the IHT bracket. This compares with the US where the threshold currently stands at $5.34m (roughly equivalent to £3.2m), and yet is still the source of considerable political controversy.
HMRC+ recently reported that IHT receipts during the 2013/2014 tax year totalled a massive £3.4bn and the Office of Budget Responsibility predicts this will keep rising, with an expected total of £5.8bn to be collected by the Treasury in 2018/19, and this is only set to continue with rising house prices and growing economic recovery.
I have recently thought about my own situation and understand from my IFA that there are still several effective methods of planning to avoid IHT, but I also understand there is renewed scrutiny over the use of some trusts and thus yet more complexity and uncertainty. I also understand that even after considering all the possible options, and despite all the best tax planning, many individuals will still find that they fall into the IHT bracket.
And this is where I had a real Marty McFly moment and felt like I was stepping out of a gull-winged time machine into the early 90’s. Whereas I had imagined that there would be a range of new innovations in this space which have rendered ‘the old ways’ redundant, it transpires that a good old fashioned life policy, written in a suitable trust, still offers as good a solution as any. Furthermore, using a whole of life plan with guaranteed premiums or one of the products with the right kind of renewable option STILL offers a simple and affordable solution that will cover you forever.
I always start from the perspective of the customer in these situations. What do I really want? Something easy to understand, that is affordable (relatively) and that gives me peace of mind that I have made a good decision that is going to preserve what money I haven’t spent for my family should the worst happen. And it turns out that the same amazingly simple products we used to sell with pride when I was young product manager and when even Peter Le Beau had hair, still does a damn good job today. All we need to do now is find a way of telling more people about it – it seems that some things never change!
Protection Review is the definitive review of the UK's multi-billion pound health and protection insurance
industry. Protection Review was established in 2003 by its then co-directors Peter Le Beau and Andy Couchman.
In 2010 Kevin Carr joined as chief executive. All three are passionate about health and protection insurance
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