Although it may not seem obvious, residents of the UK are faced with an inheritance tax increase that will become apparent in only a few years. The relief on offer is only applicable to a family home passed from a parent to the children or grandchildren, and whose value is capped at £2 million. For instance, if you have an asset valued at a maximum of £1 million, you will be able to pass it to your loved ones without paying any inheritance tax.
But that will not last for long. Owing to the unbridled increase in property values in the UK, your tax relief will soon be replaced by a tax bill. For example, if your property will be valued at £2.2 million, you will have a £70,000 tax bill instead of a £175,000 allowance.
That’s why you should seriously think about portfolio diversification. You will have to use this to better manage your investment risk. Investing in different types of assets, stocks or industries is the only way to avoid being hard hit by the inheritance tax increase. Not that we are encouraging you to evade tax. But rather, minimizing risk is something you cannot avoid if you consider yourself a serious investor.