Financial services technology provider EV has added inheritance tax functionality to its end-to-end financial planning solution EVPro to give advisers a “realistic” IHT liability calculation for their clients.
The functionality, which is available within EVPro’s Goal module, provides advisers with an IHT liability illustration based on the immediate death of an individual, or of both people in joint cases.
It allows advisers to factor in charitable donations, which are exempt from IHT and can also reduce the tax rate paid from 40% to 36% if 10% or more of the estate is donated. Historic gifts can also be added to take into account the seven-year rule for Potentially Exempt Transfers in the liability calculation.
Ashley Staples, product director at EV, said: “The IHT threshold has been frozen at £325,000 since 2021 and in that time, tax receipts have increased by 41% according to the latest HMRC figures, while over the last ten years they have more than doubled1, driven by rises in assets, particularly property prices. Announcements in the recent Budget, which extend the threshold freeze until 2030 and will also charge IHT on pension wealth, will increase the estimated tax take by a further 85% by 2029/302 with significantly more estates facing an IHT bill.
“However, although the headline marginal rate for IHT is 40%, tax-free allowances, exemptions and reliefs reduced the average effective tax rate for taxpaying estates to 13% for the tax year 2021/223. With more people being pulled into paying IHT, EVPro’s new functionality gives advice professionals a comprehensive and realistic view of their client’s tax liability and the value of assets that can be passed on to beneficiaries, which is critical to effective estate planning and intergenerational wealth transfer.”
EV further said it plans to continue to improve the functionality over the coming releases.
