Inheritance Tax Planning Services

The future can’t be predicted but it can be protected

What is Inheritance Tax?

Inheritance Tax (IHT) is paid at 40% on the value of the assets that you leave when you die, above certain limits. Most people’s estates are assessed for IHT on death, but the tax can also be chargeable and payable during your lifetime on the transfer of assets, particularly transfers into some types of trust.

IHT receipts totalled £5.3 billion between April and December 2022, £0.7bn more than in the same period the previous year.

It is estimated that around £5.5 trillion of intergenerational wealth transfers will occur over the next 30 years, primarily from the Baby Boomers – those born between 1946-1964.

There are three places your assets can go at your death: to your family and friends, to charity or to the government in the form of taxes.

Inheritance Tax Planning – Enhancing People’s Lives

Margery Gledson, Financial Planner

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You may well want to pass your estate onto your children when you die, but unless you make suitable plans your children will pay 40% inheritance tax (IHT) in the UK on all your estate above £325,000 which in today’s property market is most people’s property value alone.

You worked hard to earn your wealth, so let us work hard preserving it and help you and your family maintain its financial strength from one generation to the next.

What is the importance of estate planning?

Estate planning is about more than just tax. It is about making sure the people left behind are financially supported, that your assets are protected and that the tax your estate pays is fair.

Wealth preservation and wealth transfer are becoming an increasingly important issue for many families today.

Your estate consists of everything you own. This includes savings, investments, pensions, property, life insurance (not written in an appropriate trust) and personal possessions. Debts and liabilities are subtracted from the total value of all assets

There are various ways to legally avoid paying inheritance tax and we are here to help you every step of the way.

How to create an ‘estate plan’?

Use our handy Inheritance Tax checklist to help you create your estate plan.

An image to show an inheritance tax uk checklist on how to create an estate plan

Make a Will

One of the most important components of an estate plan is a Will. First and foremost, a Will puts you in control. You choose who will benefit from your estate and what they are entitled to. You also decide who will administer your affairs after your death.

Read about our Will writing service.

Make a Lasting Power of Attorney

A Lasting Power of Attorney (LPA) can be made for Property and Financial Affairs, as well as Health and Welfare. These documents can be put in place at any time, and it is important to consider setting them up, no matter what age you are. Once you have your Will and LPA in place, the next step is inheritance tax planning.

Read about our Lasting Power of Attorney service.

Gifting while you are alive

Almost half of all Baby Boomers say they have enough personal wealth that they can afford to gift some of it away during their lifetime and this is a most tax efficient transfer of wealth.

The amount is set by the government and is currently £325,000, which is frozen until 2026. In addition, since 6 April 2017, if you leave your home to direct lineal descendants, the value of your estate before tax is paid will increase with the addition of the Residence Nil-Rate Band (RNRB). For the 2021/22 tax year, the Residence Nil-Rate Band is £175,000.

One thing that’s important to remember when developing an estate plan is that the process isn’t just about passing on your assets when you die. It’s also about analysing your finances now and potentially making the most of your assets while you are still alive. By gifting assets to younger generations while you’re still around, you could enjoy seeing the assets put to good use, while simultaneously reducing your IHT bill.

Life insurance within a Trust

Writing life insurance in an appropriate Trust is one of the best ways to protect your family’s future in the event of your death. Your life insurance policy is a significant asset – and by putting life insurance in Trust, you can manage the way your beneficiaries receive their inheritance. The proceeds from the policy can be paid directly to your beneficiaries rather than to your legal estate and will therefore not be taken into account when Inheritance Tax in the UK is calculated.

Keep wealth within a pension

A defined contribution pension is normally free of Inheritance Tax in the UK, unlike many other investments. It is not part of your taxable estate. Keeping your pension wealth within your pension fund and passing it down to future generations can be very tax-efficient estate planning. If you die before 75, your pension will be passed on tax-free. However, if you die after 75, your beneficiaries will pay tax on the proceeds at their highest income tax rate. Your pension will not be covered by your Will, so you will need to ensure that your pension provider knows who your nominated beneficiaries are.

Invest in IHT-exempt assets

For experienced suitable investors, another way to potentially minimise Inheritance Tax liabilities is to invest in Inheritance Tax exempt assets. These schemes are higher risk and are therefore not suitable for all investors, and any investment decisions should always be made with the benefit of professional financial advice. One example of this is the Enterprise Investment Scheme (EIS). The vast majority of EIS-qualifying investments attract 100% IHT relief via Business Relief (BR).

Everyone has different requirements and motivations – the right solutions for you are the ones that suit your personal circumstances. We can work with you to discover what these are. Our estate planning advice service is designed to help you maximise your wealth and minimise a potential Inheritance Tax bill.

Inheritance Tax Reviews

“It was a great pleasure to talk to Dax. I had a list prepared and several documents assembled relating my enquiry about the best place to allocate inheritance funds. Dax cross checked my list of possible options, based on my research so far. He answered my queries on the income tax and inheritance position. At the end of the meeting I felt much more confident in taking the next step.”

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