The Government’s proposed reduction of Agricultural Property (‘APR’) and Business Property (‘BPR’) Relief has caused wholly understandable consternation and anger at the economic damage it threatens to cause. Those families who hold agricultural land and business property, however, need not rush to precipitate action. Inheritance Tax, in the main, is charged on death. The Conservative and Reform Parties have both opposed the reduction and, in spite of its huge majority, recent developments make it increasingly possible that a Labour Government will not survive the next General Election which is less than five years away.
Even if the Government perseveres in its folly, it may be, therefore, that only those with very short life expectancies will be its victims. If one is in average health, one has to reach a great age before one’s life expectancy falls below five years. According to Government tables a female in England and Wales of age 90, and a male of age 89, both have, on average, a life expectancy of five years.
Most people, therefore, even those in their seventies and early eighties are unlikely to be affected by the proposed changes in APR and BPR if either the Conservative or the Reform Party or a Coalition of the two win the next Election and do not abandon their current opposition to the changes.
Those who currently hold property qualifying for 100% APR or BPR are, therefore, subject to political risk and to mortality risk. Dealing with political risk is a matter of judgement but mortality risk is a subject matter of the insurance industry. Dealing with the risk of the Government’s proposed changes to IHT must, therefore, in most cases involve a consideration of the use of term insurance, probably for a five to six year term.
Of course, estate planning is a complex process requiring the advice of those with advanced expertise in taxation and the use of insurance will also require expert financial advice. There is no simple solution which will fit every family’s circumstances. The great thing is to keep calm, to avoid precipitate action and to take considered, expert advice.
