Reviewing your will

In December I wrote about the research into the use of Agricultural Property Relief and Business Property Relief, the aim of which was to help HMRC to understand how people utilise these reliefs in estate planning.

Following this, on 19 January, Chancellor Philip Hammond wrote to the Office of Tax Simplification (OTS) to “request that the OTS carry out a review into the IHT regime”. The OTS responded earlier this month setting out its intention to review the Inheritance Tax (IHT) regime with the aim of identifying opportunities and preparing recommendations for simplifying IHT from both a tax and administrative perspective.

The OTS findings are due to be published in the autumn.

The importance of a review

Generally, Roythornes’ Private Client team recommends reviewing your will every five years, making sure it is still fit for purpose. Why five years? We find that typically our clients’ personal circumstances have changed in that time; you may have new grandchildren, or children experiencing financial or marital difficulties, for example. Your financial position may have changed; you may have retired or inherited a large sum from a relative. As a result, we would suggest you consider your IHT position as well, to see if there is anything that might need to be addressed in the will itself or by way of some lifetime planning.

Of course, there are certain events which might prompt an earlier review, such as a death in the family or a significant change in tax legislation. The introduction of the Residence Nil Rate Band (RNRB) a couple of years ago and the beginning of its availability in April 2017 was one such change.  This encouraged people to reconsider their affairs and particularly the drafting of their wills.

The RNRB legislation is actually one area of the IHT legislation which may be subject to review by the OTS. Frequently criticised for being overly complex and even discriminatory against those without children, it’s easy to see why this new relief may already find itself subject to review. Indeed, the OTS has already identified an increase in the price of residential property as a reason for why more people think their estates may fall to be taxed on death. The RNRB was specifically introduced to address this.

So why am I pointing out this review by the OTS? Well, once again we find ourselves in a position of potential change in the IHT regime, and so it’s important that people do not simply put their wills in a drawer, or file away that tax advice and not consider either for decades at a time. It is important to consider both regularly with one eye on the changing tax environment, to make sure what you still have works. To do otherwise risks an unfortunate surprise for your beneficiaries.

If you have concerns about your estate position or will, then the Roythornes’ Private Client team is on hand to help.