In Brief - July 2005

In this edition:

• Annuity Rates

• Savings Schemes

• Revenue set to query Valuations

Annuity rates tumble as Life Expectancy rises

Reduced investment returns and increased life expectancies have caused annuity rates to plummet for both men and women, according to a recent report. A female aged 65 now has a life expectancy of 89 and a male 86. The available annuities for 65-year-olds have fallen by around forty per cent over the last decade.

Budget boosts Savings Scheme

The Chancellor had good news for savers in the budget when he announced that the investment limit for a tax-free Individual Savings Account (ISA) would remain at £7,000 until 2010.

The investment limit for ISAs had been scheduled to be reduced to £5,000.

The Chancellor also widened the range of investments which may be put into ISAs and the new Child Trust Funds.

Tax planning and investment planning are closely linked. Take expert advice.

Inland Revenue set to Query Property Valuations

One of the most subjective figures in the valuation of assets for Inheritance Tax (IHT) purposes is that of the ‘chattels’ – the household and personal possessions such as furniture, cars, household goods and so on.

Recently, the Inland Revenue announced that it is going to be looking more closely at the valuations of chattels included on the forms submitted for IHT purposes that set out asset valuations in estates.

The Revenue has identified, in particular, problems with the valuation of assets that are jointly owned by the deceased and another person who is not their spouse and assets at nil value. It will also look carefully at returns showing foreign properties with no valuation included for the contents.

If the Revenue believes that an estate has been undervalued, it can open up an enquiry and, if there is evidence that the estate has been under-declared for IHT purposes, impose penalties.