With a ‘drains up’ review of your finances complete you might well find yourself considering IGWT. For many this is one of the hardest transitions of their life. Up to this point their whole mantra has been wealth accumulation – making money, saving money and wealth accumulation activity. In a beat this all changes – suddenly you realise you have too much money and, if you don’t take drastic action you will be paying almost half of everything you have been working towards to the Government in the form of a voluntary tax. Do nothing and that is your default outcome.
However, before you start ‘splashing the cash’ there are two considerations
1. Look after No 1 (and No.2). Prior to passing surplus wealth on to others make sure you have treated yourself (and your spouse). You’ve earned it so it seems only right that you should enjoy it. Do be careful to actually spend it. Buying items that have a residual value may make the problem worse. One client spent £10K on a new porch – only to find he had added £20K to the value of his house!
2. Do no harm. Inappropriate gifts may create a problem. One generous Dad had a new sports car waiting in the driveway on his daughter’s 17th birthday. She was going to struggle – not only to drive it, but insure it, service it and even fill it with fuel!
IGWT needs careful consideration but remember – the Chancellor would much prefer you to do nothing!