Paying for care & protecting capital
Review your current assets
Often assets held for some time may not provide a competitive return and some may not be designed to provide an income at all. It could also be that your investments are currently being taxed when a non-taxable investment may be suitable. A professional review could increase income and reduce capital erosion.
Establish your risk profile
Having the correct risk profile is important as your capital may be being eroded due to poor investment returns – conversely higher returns may be possible by taking increased risks.
Consider the use of an immediate care investment (impaired life annuity)
These specially developed investments are designed to provide a guaranteed tax-free income for life paid direct to your carer in return for a one off lump sum. The amount of income is dependent on health but is often in the region of 25% to 30% of original capital per year. Capital protection and index linking options are available.
(See the case studies for further details.)
Will my estate be liable to inheritance tax?
If your estate when you die is valued at greater than the nil rate band of inheritance tax (currently £325,000), (or up to two times the nil rate band if your had a previously deceased spouse who didn’t use all there nil rate band) your estate will be liable to inheritance tax at the rate of 40% on any excess above the nil rate band.
So if your total estate is £525,000 and the nil-rate band is £325,000, the tax payable by your executors will be £80,000 (£200,000 x 40%).
We can help with inheritance tax planning.
