IHT and Frog Soup


It is said, and I have never had the desire to find out, that if you put a frog into boiling water, it will immediately try to jump out of the pan, but if you put a frog in a pan of cold water, and then heat it up, it will sit contented, not realising the danger it is in until it is too late. Please don’t try this at home.

So what has this got to do with inheritance tax planning (IHT)? Everything, actually.

Planning isn’t the issue. There are many things that can be done to limit, reduce or even completely remove any liability to inheritance tax. The real problem is realising the need to do something. When it comes to inheritance tax planning, we often fail to plan as we don’t notice that the problem is growing all around us – we act like frogs in the cold pan of water and this might just prove the point:

Seven years ago, the FTSE stood at 3512 – the markets had fallen from the previous peak in 2007. The average property price was just over £179,000. Alistair Darling was the Chancellor and the nil rate band was £325,000 each.

On the day of writing this article, the FTSE was 6925. The average property price (for the whole of the UK) was just over £216,000, Mr Hammond is in charge of the nation’s purse strings and….. the nil rate band still stands at £325,000 each. The pan of water has been simmering away. Our assets have risen in value, but the nil rate band has remained still. Our liability to inheritance tax has been rising, gradually and almost out of sight, if not out of mind.

In short, the increase in our assets has led to an increase in the potential inheritance tax liability. The last seven years have been volatile, but now is as good a time as any to take stock of the potential liability and consider your options for reducing this tax….before you croak (sorry!)

At Mantles, we have access to a range of options to reduce or totally mitigate your IHT liability. Please contact us if you’d like to discuss your individual circumstances.


Written by Sean O'Shea | Senior Consultant

Sean joined has been an IFA for over 20 years. Read more >>

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