Inheritance Tax Planning
Passing Inheritance to your loved ones
Most important to our clients, is being able to pass inheritance on to their loved ones. We work hard throughout our lives to ensure they have a nest egg once we’re gone. Without a comprehensive estate plan in place and the right Inheritance Tax planning, there is a risk some of your assets and wealth could end up in the hands of the HMRC after you pass away.
This means your family and friends won’t benefit as favourably as they should.
The most important step is making your will and keeping it up to date. You need to appoint a dependable executor, as this is the person responsible for ensuring the IHT bill is paid out of your estate.
We can advise you on the best course of action for your circumstances. All our advisors are fully trained and compliant with the latest IHT regulations and we incorporate inheritance tax planning into our service.
Avoiding Inheritance Tax
When you die you want your estate to pass to your children. However, having to pay Inheritance Tax may reduce the amount of your estate that ends up in their pockets. Prevent HMRC getting their hands on your assets before your children do by putting the right planning in place.
Here are just a few ways you can avoid paying Inheritance Tax:
1. Make a Will
Making a Will is a major part of estate planning. You can ensure that your assets are distributed in line with your wishes. Without a Will in place your assets are distributed according to the rules of intestacy. Potentially this makes them liable for IHT, which may have been avoided with a Will.
2. Stay below the IHT Threshold
The Inheritance Tax nil rate band, or IHT Threshold, currently stands at £325,000 per person. This will remain at the same level until 2026. It is passable to a spouse or civil partner on death, resulting in a total nil rate band of £650,000 for couples.
There is also a main residence transferable allowance of £175,000 per person, to avoid Inheritance Tax on property. This is in addition to the nil rate IHT threshold. Therefore married couples or civil partners could potentially pass on up to £1 million free of IHT.
3. Gift your assets
Should you choose to gift your assets to family members and live for a further 7 years, then these gifts are free. Subsequently they avoid Inheritance Tax. However if you die within 7 years of making the gift, Inheritance Tax is paid on a reducing scale. Gifts of £3000 per year can be made free of IHT.
4. Place assets in a Trust
By placing your assets into a Trust they do not form part of your estate on death and avoid Inheritance Tax. For example you could place assets into a Trust for the benefit of your children when they reach the age of 18. There are many ways of avoiding Inheritance Tax with Trusts.
5. Leave a Gift to Charity
Anything left to charity is free of Inheritance Tax liability. If you leave at least 10% of your total assets to charity the remaining assets will be taxed at 36% instead of 40%.
Always seek professional advice when looking for the best inheritance tax planning. A qualified estate planning specialist such as ourselves can offer you help and guidance in the right solutions for your particular circumstances.
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