The Potential IHT Insight is used to view the potential inheritance tax and total wealth transfers for each year in the plan. It can be run for one plan or can be used to compare two plans within the same client record.
How to run the Potential IHT Insight
Within the client record, click Insights on the top menu, then click Potential IHT:
To view the inheritance position for one plan, set the Comparison Plan dropdown to No Plan Selected then click the Get Started button. The insight chart will show the potential inheritance position for the plan which is open.
The red line shows the potential inheritance tax and the blue bars show the total wealth transfer. The total wealth transfer figure shows the amount the clients' beneficiaries will receive after inheritance tax, including distributions outside of the estate e.g. pensions (up until 2027). Click on a bar of the chart to view the underlying figures.
Click the Details button to see a more detailed breakdown of the underlying figures.
To compare the inheritance position of two plans, select another plan in the Comparison Plan dropdown.
When the insight is run, two charts will appear. The top chart shows the plan which is open, with potential inheritance tax shown in the red line. The bottom chart shows the comparison plan, with potential inheritance tax shown in the purple line. Click on a bar of the chart to view the underlying figures for both charts (the Details button can be used to see a more detailed breakdown of the underlying figures).
When two plans are compared there is another chart option: the Estate Tax Comparison chart. This chart does not show the Total Wealth Transfers bars. Instead it compares the inheritance tax for the two plans in one chart. The inheritance tax for the plan which is open is shown in the red line, the inheritance tax for the comparison plan is shown in the purple line.
Note: each bar shows the potential inheritance tax position if the client(s) die at the start of that year. The software always assumes that mortality occurs at the beginning of the plan year in question, and so the financial position (at mortality) always reflects asset values as they were at the end of the preceding year.
How to view the inheritance tax calculation for each year of the plan
The calculation for the final year of the plan can be seen in Overview > Legacy > Planned Legacy. The calculation for year 2 of the plan can be seen in Overview > Legacy > If both die today.
To investigate the legacy position for any other year of the plan in more detail, set up a what if scenario using the 'change life expectancy' guided what if, then use the Planned Legacy Overview screen.
Instructions on how to set up an early mortality what if can be found here: Modeling early mortality.
How to print a report showing the Potential IHT Insight result
Select the IHT Insight in the Insights section of the Report screen when choosing which elements to include in a printed report.
This will print out the insight chart (if you have run a comparison plan, it will print out the chart showing the two lines which represent the IHT liability for both plans) and a page with a table showing the Nil Rate Band, Inheritance Tax and Total Wealth Transfers for each year for each plan.
Note: If the insight has been run on-screen the report will use the same inputs that were used on-screen. These inputs can be viewed before generating the report by clicking on Review, Configure & Generate and then navigating to the report and clicking on the three dots to configure the report.
This article will explain how to edit the Insight report inputs; How to view and edit the Insight reports inputs - UK.