Advisers need to be aware of the potential inheritance tax liability their clients may incur if they have built up a large portfolio of tax free savings such as PEPs and ISAs, according to Aegon Scottish Equitable.
The company explained that many individuals may have invested in these tax-free savings products for years thinking their money was in a safe, tax-free environment. Although they are free of income tax or capital gains tax during the individual's lifetime, on death, they form part of the estate for inheritance tax. This means that if their estate is above the current nil rate band of £312,000, they will be taxed at 40pc on death on assets above this amount. Aegon has calculated that an individual who has taken their full PEP or ISA allowance since this type of investment was launched in 1...
To continue reading this article...
Join Professional Adviser for free
- Unlimited access to real-time news, industry insights and market intelligence
- Stay ahead of the curve with spotlights on emerging trends and technologies
- Receive breaking news stories straight to your inbox in the daily newsletters
- Make smart business decisions with the latest developments in regulation, investing retirement and protection
- Members-only access to the editor’s weekly Friday commentary
- Be the first to hear about our events and awards programmes