Confidential planning solutions when your time is precious

It’s certainly a very difficult subject and it can be awkward on both sides of the conversation; the individual having to come terms with their own mortality, and their loved ones trying to plan for life afterwards. The one common thread that unites both sides is the need to provide financially for one’s family after death in the most tax efficient way possible…

Deathbed planning does not just cover tax efficiencies, it’s also important on a number of levels including control and security. In recent years the difficulty of this type of planning has been made even more complicated. Every sort of tax planning is coming under scrutiny and even the very phrase “tax planning” can be frowned upon.


HMRC’s guidance on the tax general anti-abuse rules (‘GAAR’) makes interesting reading because they set out certain aspects of tax planning that they do not view as abusive. So far HMRC seem to be following through on this and it’s certainly evident in their view of such planning when they encounter it in individual’s tax affairs. This type of tax-planning almost comes with HMRC’s blessing and demonstrates that GAAR is unlikely to be used as widely as was first thought.


Proactivity is the key when considering deathbed planning. Without proactive tax planning, couples particularly, can miss out on ways to avoid capital gains tax.

Use of trusts

The discretionary trust set up properly through an individuals will offers more planning possibilities both in the immediate term and in the future. In some situations, a nil-rate band discretionary trust of which the surviving individual is one of the beneficiaries can be a good solution.

The surviving member(s) can benefit from either income or capital in the trust during their lifetime and the gift with reservation of benefit rules do not apply in most circumstances. Therefore this solution can provide adequate security and good tax efficiency.

Business Property Relief

Where one spouse in a marriage or civil partnership owns shares in a trading company there are opportunities for this to qualify for 100 per cent inheritance business property relief. There may be some advantages if some of these were transferred by way of gift to the dying spouse. This is a very complex area and requires significant planning but it’s a reminder that very effective tax-planning can be undertaken at the saddest of times. Tax will usually be the last thing on a couple’s mind at times like this, but it may be in their interests to be reminded.


When assets pass to an individual on death, they may or may not be subject to Inheritance Tax. They are, however, generally exempt from CGT. In addition the new owner is treated as if they had acquired the asset at its market value at the date of death. This is referred to as the CGT uplift on death and, under the right circumstances, it can provide an opportunity to save significant amounts of tax.

One of those circumstances involves “deathbed planning.” When a member of a married couple or civil partnership dies whilst holding assets such as investment property or stock market investments. These assets will generally attract CGT at 28% or Inheritance Tax at 40% on death.
However, and this is the key part, these assets can usually be passed to a surviving spouse free of both taxes.

Following this, the capital gains tax uplift provides the surviving individual with an opportunity to make a gift of the assets to any children. After seven years this would then fall outside of the individuals IHT estate.