Financing the future

Although persistent levels of inflation mean we are likely to see fewer base rate cuts than hoped for this year from the Bank of England’s Monetary Policy Committee, that doesn’t mean lenders don’t have some tempting products on offer. Whilst rates may be higher than one would like, the margin that banks are prepared to lend at has reduced, and there is every reason to review current borrowing and restructuring opportunities. For many, there are some interesting ways of restructuring things and some very worthwhile savings to be made.

Tracking down cheaper borrowing is just the beginning of the refinancing journey. Starting this can also be a useful inflection point that allows estates to take an overarching view of ownership structures and succession planning.

This has become even more imperative following the UK government’s proposed changes to Inheritance Tax reliefs. For many, the transfer of assets before death has now become a key strategy to mitigate future tax exposure.

For a client that we helped recently, the refinancing process was the trigger to shift the ownership of their estate, and the debt, into the name of their successor.

This was not a straightforward exercise, with many things to think about, including the lifetime gifting rules, the challenges around reservation of benefit, and the need for the person transferring the assets to live for seven years before the gift becomes completely exempt from IHT liabilities.