I'm new to this blogging game, and possibly new to many of you. However, I have in fact just returned to AXA after seven years away in the ‘real world' as technical director of a large regional IFA business in Newcastle upon Tyne. Now I am back as head of development and you'll find I have a lot to say!
So where does one start a new blog? Easter? Arctic weather? That’s a good start I think! The snow certainly added a new dimension to the children’s Easter Sunday egg hunt in our garden which was preceded by a full blown snow ball fight.
I had forgotten quite how painful and cold a face-full of compacted snow can be, even when sent on its way by a six year old. The excellent company, roaring log fire and a home win for Newcastle United were, however, ample compensation.
Unfortunately, the snow did put paid to some of the other outdoor activities we had planned for the friends we had staying and so there was plenty of opportunity for conversation. As our guests both work in banking and finance, I suppose it was inevitable that the topic of discussion eventually turned to matters financial.
Once we had done house prices, the markets and the credit crunch/Northern Rock fiasco we got on to inheritance tax (time for another drink I hear you say!). My friend had a bit of a shock earlier in the year.
Sadly, a close relative had passed away over the Christmas break and he has been helping to sort out the estate. Like many he believed that inheritance tax is no longer a problem because of what he had read in the papers and heard on the news last year.
You will recall that on 1 October 2007 George Osborne announced that a Conservative Government will raise the inheritance tax threshold to £1 million, thus taking the family home out of inheritance tax. Not to be outdone, on 9 October Alistair Darling announced with immediate effect the transferable inheritance tax nil rate band for spouses and civil partners.
You can imagine my friend’s surprise (I can hear the sharp intake of breathe now) when initial indications are that the tax liability on the estate will be into six figures. Plans for that place in Portugal are currently under review! The truth of the matter is that neither of these policy announcements has made a significant change in the need to plan for inheritance tax.
The Conservative announcement is theoretical as they are not in power, and still may not be come the next election. There are also indications that even if they do win they will commit to Labour spending plans for at least four years and so there will be no tax cuts in the early years of any new administration.
Labour’s announcement on transferring nil rate bands was very welcome but it merely automates a process which people could have facilitated anyway by will planning. What these statements have left us with is a great deal of uncertainty and misunderstanding amongst customers.
AXA held focus groups with customers and IFAs at the end of 2007 that showed how widespread the confusion about these announcements is. My very unscientific one-person Easter focus group brought home to me how real this problem is. If sophisticated, financially literate individuals such as my friend are beguiled into believing there is no longer a problem, what hope is there for the less well informed?
Mark Wilkinson is head of development at AXA Wealth Management
The views expressed in this blog are those of the individual and not necessarily the company he represents.IFAonline
Slow progress in improving diversity
Share purchase deal with assets of £28m
Came into effect in January
Three examples of compensation rule issues
Buying in baskets