Paul Hampton

Many people think gifts shrink for inheritance tax purposes between years 3 and 7. They don’t.  Which is why most people get “tapering” wrong. When you give money away during your lifetime, that’s called a 𝗴𝗶𝗳𝘁. Every person has a nil rate band - currently £325,000. This is the portion of your estate (and gifts you make in the seven years before death) that can pass without inheritance tax. Here’s where the confusion begins. A lot of people believe that once you’ve made a gift, the amount itself starts to shrink for tax purposes if you survive more than three years. This is often referred to as “tapering” or “taper relief”. That’s not true. The gift always stays the same. Tapering only applies to the 𝘁𝗮𝘅 𝗯𝗶𝗹𝗹 that could be due if you die within 7 years. ⸻ 🤔 So what’s the difference? 👉 𝗘𝘅𝗮𝗺𝗽𝗹𝗲 𝟭 You give your son £100,000. You die 6.5 years later. Because this £100,000 is within your £325,000 nil rate band, there’s no tax bill at all - meaning there’s nothing to shrink. But it still matters: That £100,000 has eaten into your band. Which means when the rest of your estate is assessed, there’s only £225,000 of nil rate band left. And because any unused proportion can be transferred between spouses, it also means your partner will inherit a smaller band down the line. So while there’s no immediate tax, it can reduce the protection available to your family later by £100,000. 👉 𝗘𝘅𝗮𝗺𝗽𝗹𝗲 𝟮 You give away £500,000. You die 6.5 years later. The first £325,000 is covered by your nil rate band. No tax on this part. The remaining £175,000 is a chargeable transfer. 𝙏𝙝𝙞𝙨 is where tapering applies - it reduces the potential tax bill on the £175,000, because you died between years 3 and 7. ⸻ And that’s the key point: ❌ Tapering does 𝗻𝗼𝘁 reduce the size of the gift. ✅ Tapering only reduces the tax bill, and 𝗼𝗻𝗹𝘆 if your gifts already exceed £325,000. For most families, tapering 𝗻𝗲𝘃𝗲𝗿 𝗮𝗰𝘁𝘂𝗮𝗹𝗹𝘆 𝗰𝗼𝗺𝗲𝘀 𝗶𝗻𝘁𝗼 𝗽𝗹𝗮𝘆. It’s one of the biggest misconceptions around inheritance tax planning - and one that can cause unintended consequences if misunderstood. If you’ve received or given gifts, it may be useful to double-check your position. If you’re planning on giving or receiving gifts, it might be worth bookmarking this post for future reference. ♻️ I’m posting mainly about inheritance tax planning in September. Follow along if you’re planning on giving, or receiving, an inheritance in the future.

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Let me make it clear — you will not automatically pay inheritance tax on your pension just because you die. Here’s when it does become an issue: - From April 2027 onwards - You still have pension funds remaining when you die - You don’t have a spouse, or the pension goes to non-spouse beneficiaries - Your estate exceeds the inheritance tax threshold And income tax comes into the mix to when: - You die after the age of 75 - And your beneficiaries draw from the pension and pay income tax on it Now for the numbers, in MOST cases: - If you're single, have kids, and your total estate (including a main residence and your pension) is under £500,000 — there’s no inheritance tax to pay - If you’re married or in a civil partnership and everything gets left to the other on first death, then to your kids, you can pass on up to £1 million IHT-free - Only the amount above those thresholds faces 40% IHT - And if death was after age 75, when your beneficiaries access the pension, they’ll pay income tax at their rate — possibly up to 45% That’s how the total tax can hit 65% on the excess — but most people aren’t in that position. So no, your whole pension won’t be wiped out. But the real damage isn’t the tax itself, it’s the confusion. Scary headlines will do far more harm than the policy ever could. And once people lose confidence in pensions, we all lose.

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📢 Inheritance Tax (IHT) is one of the most unpopular taxes in the UK. Why? Because it’s a tax on money that’s already been taxed once before. And from April 2027, it’s changing again: ➡ Unused pensions will be included in your estate for IHT. ➡ More estates will cross the threshold – even for people who wouldn’t consider themselves “wealthy.” The current rules: - Everyone has a £325k nil rate band (NRB). - Plus, if you leave your home to direct descendants, there’s an extra £175k residence nil rate band (RNRB). - For couples, these allowances can be combined – up to £1m tax-free. But here’s the challenge: - These allowances are frozen until at least 2029. - Property and pension values continue to grow. - Add pensions into the IHT calculation from 2027, and suddenly more families will be pulled into the net. What can you do? There are practical ways to reduce future liabilities: ✅ Gifting allowances (£3,000 a year plus small gift exemptions). ✅ Trust planning – placing life insurance or investments in trust. ✅ Pension nominations – ensuring your pension passes as efficiently as possible. ✅ Regular reviews – estate planning isn’t one-and-done; it needs updating. 💡 Why plan ahead? Because IHT planning often takes 7 years to be fully effective (e.g. gifts). The earlier you review your position, the more options you’ll have. IHT may be unpopular – but with the right planning, it doesn’t have to be unavoidable. 👉 When did you last review your estate plan?

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Big changes are coming to the UK mortgage landscape. Are you ready to adapt? The Mortgage Charter, introduced in June 2023, was a lifeline for struggling UK homeowners. It promised: → 12 months grace after a missed payment → Free lender advice without credit score impact → Flexible repayment options like interest-only switches But now? That lifeline could disappear. Here’s what it means if the Charter is scrapped: → Miss one payment, and repossession could start immediately. → Seeking advice might dent your credit score. → Flexible repayment options? Gone. → Fewer checks mean repossessions could happen faster. The safety net? It’s fraying. This isn’t just about numbers. It’s about people. Families. Homes. If you’re already stretched, this could push you into survival mode: → Higher stress. → Increased risk of bankruptcy. → Worst case? Homelessness. The question is, what’s your plan? Because waiting isn’t one. If the FCA pulls the plug, being proactive could make all the difference. → Review your mortgage now. → Understand your options. → Don’t wait for the letter to arrive. Want to chat through your next steps? You know where I am. Your home may be repossessed if you do not keep up repayments on your mortgage.

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You may have heard about the recent Inheritance Tax (IHT) changes following last year's Budget. Here's what you need to know in less than 60 seconds 👇

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If you’re a financial adviser wondering what to post, here’s a framework I often share: There are 3 core content types that help do the heavy lifting for your advice business: 1️⃣ Problem & Solution Content 2️⃣ Mindset Shifting Content 3️⃣ Authority Content Yesterday I posted about problem and solution content. Today I want to tell you about 2️⃣ Mindset Shifting Content. This is where you challenge what your audience thinks they should be doing vs what will actually help them. For example: ❌ What you think you need to do:
“Wait for a lump sum or time the market perfectly to invest.” ✅ What you actually need to do:
“Invest consistently, in small increments, over time. Wealth is built through habit, not luck.” ❌ What you think you need to do:
“Buy an investment property because that’s how Australians build wealth.” ✅ What you actually need to do:
“Property can be great but it’s not the only way to grow wealth. A well-structured portfolio can get you there without locking up all your cash or taking on extra debt.” ❌ What you think you need to do:
“Just earn more money and work harder.” ✅ What you actually need to do:
“Earning more doesn’t help if you don’t have the right structure. Without a plan, your expenses grow with your income and you stay stuck in the same cycle.” Stay tuned for 3️⃣ Authority Content tomorrow!

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Most business owners don’t think about refinancing before they restructure. Jim thought refinancing his cars would be simple. He was wrong. For years, Jim stayed loyal — • Never missed a repayment • Figured loyalty bought him trust • Never shopped to get a cheaper rate When the restructure came, the lender wouldn’t help. Jim was devastated. Without those vehicles, his business couldn’t trade. We talked about: 1️⃣ His business goals 2️⃣ The vehicles he needed 3️⃣ Why the business was restructuring We broke it down with another lender, explained the restructure, and showed how it would put the business in a stronger position going forward. Within 48 hours, we had an approval. Jim wasn’t in as bad a position as he thought. 👉 He just needed someone to show him the opportunity he couldn’t see.

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