Walking direct from the site

The simplest example of Inheritance Tax planning is to make gifts and to survive them by seven years. There are several problems with this approach:

  • Lack of liquidity;
  • Parsimony;
  • Lack of trust in the younger generation;
  • Capital Gains Tax on disposals by way of gift; and
  • Leaving it all too late.

This note tries to take a positive attitude to the problem.  Assuming that:

  • you have not sunk all your wealth into a house that is now too large for your needs; and
  • have recently generously helped younger relatives to get onto the housing ladder by making simple cash gifts;

your next task is to live a little longer.

    The ‘seven year’ rule

    Before 1975 it was the rule that a gift made more than 3 but less than 7 years before death was ‘tapered’ so that on death in, say, year 5 only part of the value of the gift came into the reckoning for death duty (as it was then called).  That is no longer the rule. We now have tapering, not of the gift but of the tax. Thus a cash gift of, say, £50,000 made 5 years before death is set against the individual’s ‘nil rate band’ of £325,000 reducing it to £275,000.  Effectively, in many cases, until 7 full years have elapsed from the date of the gift there is no saving of tax at all. As Michael Caine would say, not many people know that. The Government recognise this and are planning changes: watch this space.

    The remedy

    We all know that we could lead healthier lives, cutting down on life’s pleasures such as good food, fine wine and the like.  In unsettled weather we are unlikely to walk to the shops even just to pick a few items. However, if we could get into the habit of taking more and regular exercise we might live longer and postpone the day on which we give up our independence and move into a retirement or care home.  The benefit to our families, from being spared care fees, might be enormous.  An ‘asset protection’ trust may not be the answer: see our separate discussion of that structure.

    ‘SKI’ holidays

    Some moderately wealthy pensioners live too frugally.  They have more in the bank at the end of the year than at the beginning.  That just leaves more to suffer IHT later. They do not understand the concept of the ‘Spend the Kids’ Inheritance’ Holiday. This article is not for them. There are no pockets in a shroud. If you don’t travel First Class, your children will.  Much better to get out there, go walking, see things and enjoy good food and drink in the evenings. 

    One very effective format is to take a motorhome and travel widely.  There is, however, a practical issue which this article tries to address. You have driven, say, four hours and arrived at a good site near great scenery.  You have had enough of driving and plan to stay a few days.  The trouble is that all the walks in your guide book were written for people with caravans who could drive another three miles to where the best walks start.  That would add six miles to your hike, enough to put you off.  Worse still, in the UK there are often height barriers preventing campervans from parking precisely where you would want to if you were to attempt the local walk.

    Where to go

    An internet search ‘walking direct from the campsite’ will take you to excellent resources such as walkingworld and ukcampsites.co.uk.  There is a mass of information available on walks in the UK but there is relatively little mention of walking in German-speaking countries. That is a pity: often over there

    • the facilities are superb;
    • the signage is way better than in the UK;
    • the parking is right where you want it, without restriction; and
    • the language is not a problem.

    Of course, if you can muster simple sentences in German you will be praised for trying but nearly always they will just switch to English to help you.  This may still apply even after Brexit!

    To read about specific walks, most of which start straight from your pitch, go to the walks page. 

    Let’s work together