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Inheritance Tax Planning

Do you know how much tax would need to be paid on your estate if you died tomorrow? We can help to arrange your financial affairs, assets and possessions – calculating asset values, creating trusts and considering investments – to minimise the impact of tax on your estate and provide the maximum possible amount to your beneficiaries. An upside to planning your legacy now is that somebody other than you will know exactly what you’ve got and how your affairs and cash-flow are being managed. This will be invaluable to solicitors and family members when the time comes to go over your estate. One of the first stages of our advice is to identify the tax you would pay as things stand, and then compare this with the figure that would result from our creative independent advice. Get in touch to learn how we can protect your family’s inheritance.

Inheritance Tax Planning

  • Is inheritance tax planning too complicated?

    Once it is established that the value of the estate will be above the nil-rate band, we certainly do find it is complicated, but with the right planning many people see a significant reduction in their inheritance tax (IHT) bill. We can encourage clients to make the best use of gifts, trusts and transfers between spouses to reduce their estate exposed to tax to a minimum. This will require a lot of time and a period of years to put into action to make an effective difference, which is why it’s important to start planning your financial affairs for your later life and possible demise well in advance. If you were to unexpectedly pass away soon after your retirement, you may not have had the chance to make all necessary preparations for the preservation of your wealth.

  • What is the standard rate of inheritance tax?

    The standard rate of IHT is 40% on the deceased’s estate above the nil-rate band(s) (NRB), which is currently £325,000. If you are married or in a civil partnership, you can still leave your entire estate to your spouse without attracting inheritance tax, nor affecting their nil-rate band allowance. The government also introduced Residence NRB to recognise the general rise in property prices, whereby currently £125,000 can be set against the value of the deceased’s main residence. This is set to rise to £150,000 in 2019/20 and £175,000 in 2020/21, and it will stay at this amount thereafter. Also note that if you leave at least 10% of your estate to charity, then the balance of your estate above the NRB will be taxed at 36% instead of 40%.

  • What is the seven-year rule?

    This is a rule introduced by HMRC to prevent people close to death from transferring ownership of assets to spouses, family members or others to deliberately reduce their estate with the aim of avoiding inheritance tax. It may be wise to start thinking about reallocation of your estate while you are still very much alive.

    Gifts made to individuals or to trusts more than seven years prior to your death will potentially not attract IHT – this is known as a ‘potentially exempt transfer’. However, if you unfortunately pass away within seven years of any gifts that exceed the annual allowances, then they will be subject to IHT on a sliding scale. It is also wise to take professional advice before signing away all or part of your house while you still live in it – please talk to us to learn more.

  • Which investment options are best for minimising inheritance tax?

    There are a number of different investment options that qualify for government reliefs, for example certain share portfolios qualify for full IHT relief after a minimum holding period of two years. One investment option is AIM (alternative investment market) shares, which facilitate investment into newer and smaller businesses, some of which are eligible for business relief, meaning they could fall outside your taxable estate. The advantage with this is that shares can see rapid growth, providing tremendous returns, but can equally be very high risk and result in heavy losses. We would very much consider your attitude to risk before recommending these.

    It’s worth noting that investment bonds are particularly good for IHT, planning when held in a trust. Please speak to us about how this could your family.


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