M&g Plc · LSE:MNG
M&g — Investor Presentation (September 2023)
45 slides from M&g's investor presentation, September 2023
Slide 1: The building blocks of IHT planning
The building blocks of IHT planning The information that follows is based on our understanding of current taxation, legislation and HM Revenue & Customs practice as of September 2023 all of which are liable to change without notice. This is just for UK advisers – it’s not for use with clients
Slide 2: Important Information
Important Information This content is based on our understanding of current taxation, legislation and HM Revenue & Customs practice all of which are liable to change without notice. The impact of any taxation (and any tax reliefs) depends on individual circumstances. Where content includes case stud
Slide 3: Learning Objectives
Learning Objectives By the end of this session you will be able to: Evaluate the Estimate the likely different options IHT liability available to someone will mitigate an IHT have liability
Slide 4: Receipts are rising
Receipts are rising
Slide 5: IHT receipts are rising
IHT receipts are rising 12.1 Inheritance tax: analysis of receipts This table contains data on receipts (in £millions) by HMRC of charges arising from wealth transfers taxable at death, taxable lifetime transfers and charges on trusts. 2012 to 2013 to 2014 to 2015 to 2016 to 2017 to 2018 to 2019 to
Slide 6: IHT receipts are rising
IHT receipts are rising 12.10a Inheritance Tax: Tax liability by region Estimated numbers of estates liable to tax passing on death in the 2019 to 2020 tax year by region. Region Number Amount (£ million) United Kingdom 23,000 4,960 England 19,400 4,230 North East 371 61 North West 1,540 278 Yorkshi
Slide 7: Source: ONS
100% 4 90% 4 80% 4 70% 4 60% 4 50% 4 40% 4 30% 4 20% 4 10% 4 0% + 1 T T ; 1 T T £0 £50,000 £100,000 £200,000 £300,000 £500,000 £1,000,000 £2,000,000 Value of net estate (lower limits) Proportion of estate containing asset category = UK residential buildings ™Cash Securities m Other assets Source: ON
Slide 8: Estimating the liability
Estimating the liability
Slide 9: Estimating the liability
Estimating the liability Step £ 1 Total market value of the estate 1. 2. £XXXX 2 Deduct allowable debts (£XX) 3 Deduct Reliefs (APR, BPR) (£XX) 4 Assets left to spouse/civil partner/charity (£XX) Taxable estate £XXX 5 Total NRB & RNRB available 2. (£XX) 6 Chargeable estate (No IHT if this is a ?? ne
Slide 10: Estimating the liability
Estimating the liability Step £ 1 Total market value of the estate 1. 2. £XXXX 2 Deduct allowable debts (£XX) 3 Deduct Reliefs (APR, BPR) (£XX) 4 Assets left to spouse/civil partner/charity (£XX) Taxable estate £XXX 5 Total NRB & RNRB available 2. (£XX) 6 Chargeable estate (No IHT if this is a ?? ne
Slide 11: Building blocks
Building blocks Immediately Chargeable Successful SuccessfulPETs PETs Exempt ExemptGifts Gifts IHT IHTReliefs Reliefs Nil Nilrate ratebands bands
Slide 12: Zero IHT within NRB limits
Zero IHT within NRB limits £500,000 £450,000 £400,000 £350,000 £300,000 £250,000 £200,000 £150,000 £100,000 £50,000 £0 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22 2022/23 2023/24 2024/25 2025/26 2026/27 2027/28 Nil Rate Band Residence Nil R
Slide 13: Transferable NRB facts and planning
Transferable NRB facts and planning
Slide 14: Transferable NRB fast facts
Transferable NRB fast facts 5 things you need to know Maturity 1 2 3 4 5 Death of a Assignment Part (e.g. a life assured for money surrenders Full capital giving rise or money’s in excess of surrender redemption to benefits worth 5% limit bond Claim process on Only available on Time limit for Surviv
Slide 15: Transferable NRB facts
Transferable NRB facts John (died 2008/09) £156,000 NRB was £312,000 Everything else to Joan + 50%
Slide 16: Three Transferable NRB planning points
Three Transferable NRB planning points SURVIVOR MORE THAN MAKES A CLT ONE MARRIAGE DISCRETIONARY WILL TRUST?
Slide 17: No. 1 - survivor (Ann) makes a CLT
No. 1 - survivor (Ann) makes a CLT Growth 7 Year CLT Capital Settlor - Ann Discretionary Gift Trust
Slide 18: Survivor (Ann) makes a CLT
Survivor (Ann) makes a CLT Growth 7 Year CLT Capital Settlor - Ann Discretionary Gift Trust
Slide 19: No. 2 - more than one marriage
No. 2 - more than one marriage Harriet is 70 years old and happily married to Ivan. She was already a widower when she married Ivan. Harriet came to the second marriage with a double NRB as her first husband Gilbert left everything to her. Q. How many NRBs can be used?
Slide 20: If Ivan dies first
If Ivan dies first Harriet’s estate Double Ivan’s Left to swollen If Harriet Assets NRB Harriet by Ivan’s dies available assets
Slide 21: If Ivan dies first
If Ivan dies first Harriet’s estate Double Ivan’s Left to swollen If Harriet Assets NRB Harriet by Ivan’s dies available assets Double If Harriet dies NRB still available Discretionary will trust Access Harriet
Slide 22: Hey Presto three NRBs are utilised
Hey Presto three NRBs are utilised Gilbert’s death Ivan’s death Harriet Reduced estate thanks 100% to Harriet to discretionary will trust 2 x NRB on Harriet’s 2 x NRB on Harriet’s 1 x NRB inside death (thanks to death discretionary will trust previous marriage)
Slide 23: No. 3 - discretionary will trust?
No. 3 - discretionary will trust? ▪ 6% < 40% ▪ > 200%? ▪ Control ▪ Avoid beneficiaries’ estates ▪ 2-year rule
Slide 24: Residence NRB facts and planning
Residence NRB facts and planning
Slide 25: Residence NRB fast facts
Residence NRB fast facts 5 things you need to know Death of a Assignme Maturity 1 2 3 4 5 Part life nt for (e.g. a surrenders Full assured money or capital giving rise money’s redemptio in excess surrender to benefits worth n bond of 5% limit The home needs Children or other You need to know Interac
Slide 26: Three Residence NRB planning points
Three Residence NRB planning points DOWNSIZING TRUSTS PLANNING AROUND THE £2M TAPER THRESHOLD
Slide 27: No. 1 – The downsizing addition
No. 1 – The downsizing addition On death Direct descendants ‘Other’ assets
Slide 28: No. 2 – Trusts
No. 2 – Trusts • Part of the deceased’s estate? • Type of trust? • Part of the direct descendant’s estate?
Slide 29: No. 3 – the £2m taper
No. 3 – the £2m taper ▪ Tapered RNRB withdrawal for estates with net value >£2m ▪ Reduced by £1 for every £2 over threshold ▪ Spouses/civil partners? (test £2m threshold on 1st & 2nd death)
Slide 30: No. 3 – the £2m taper
No. 3 – the £2m taper ▪ Tapered RNRB withdrawal for estates with net value >£2m ▪ Reduced by £1 for every £2 over threshold ▪ Spouses/civil partners? (test £2m threshold on 1st & 2nd death) • Liz, who has never been married, died in 2023/24 • Her ‘default’ RNRB is £175,000 • Her death estate is valu
Slide 31: Calculating the estate for the £2m threshold
Calculating the estate for the £2m threshold Total of all the assets less any debts or liabilities ▪ Do not deduct exemptions (e.g. spousal) ▪ Do not deduct reliefs (e.g. BPR) ▪ Do not add back lifetime gifts
Slide 32: Single client dies in 2023/24
Single client dies in 2023/24 Original estate £2,350,000 – RNRB £0 ‘Deathbed’ gift (£350,000) RNRB OF £175,000 now reinstated – IHT saving of £70,000 (20% tax relief) Survive 7 years, £350,000 out estate - save another £140,000 (40%)
Slide 33: IHT Relief(s)
IHT Relief(s)
Slide 34: Business Property Relief – five fast facts
Business Property Relief – five fast facts 5 things you need to know Up to 100% 2-year Business The 50% Excepted relief is ownership must pass test assets? available test the trading test
Slide 35: Business Relief or Trust?
Business Relief or Trust? Blend? Access Tax law Flexibility Investment Time issues
Slide 36: Exempt gifts
Exempt gifts
Slide 37: IHT exempt lifetime and on death
IHT exempt lifetime and on death Gifts to spouses Gifts to charities and civil partners
Slide 38: IHT exempt – lifetime only
IHT exempt – lifetime only Small gifts In consideration Annual Normal of marriage exemption expenditure out of income
Slide 39: Annual Exemption planning
Annual Exemption planning £3,000 £3,000 £3,000 £3,000 This Year Previous Year This Year Previous Year Up to £12,000 Gifts Life policy Loan write offs Pensions premiums for others
Slide 40: IHT exemptions – a question!
IHT exemptions – a question! The limit What lifetime only T H exemption is the most E generous and why? S K Y
Slide 41: IHT exemption with no monetary limit
IHT exemption with no monetary limit Pension contributions for family? Normal Out of Expenditure Income Bond in Discretionary Trust? Maintain Normal Standard of living
Slide 42: HMRC paperwork
Gifts and other transfers of value HM Revenue & Customs When to use this form Fill in this form to tell us about any gifts the deceased made on or after 18 March 1986. Do not tell us about any gifts where the total value was £3,000 or less in any tax year, small amounts of £250 or lessor ifthe Gifts
Slide 43: Despite the cost-of-living crisis, one in four over-45s say inheritance will be larger
Despite the cost-of-living crisis, one in four (25%) over-45s says the inheritance they leave will now be larger
Slide 44: Support
Support Articles Videos Tools & Ask the Techs Calculators Usual Contact LinkedIn My View
Slide 45: M&G plc company information
M&G plc is a company incorporated and with its principal place of business in England, and its affiliated companies constitute a leading savings and investments business. M&G plc is the direct parent company of The Prudential Assurance Company Limited. The Prudential Assurance Company Limited is not