Inheritance Tax and Lifetime Planning

Inheritance Tax is a tax that has to be paid after you die. The amount of inheritance tax that has to be paid is currently charged at 40% on the value of all your assets over the nil rate band allowance.

For example, your net assets are worth £425,000, if the nil rate band is still at the current value of £325,000 when you die, your estate will be charged 40% of £100,000 or £40,000.

Various rules can reduce the amount of inheritance tax that has to be paid on the value of certain assets, and because your estate can pass tax free to your spouse or civil partner there is currently a joint allowance of £650,000.

From April 2017 there is an additional tax-free allowance for people who own a home. This is called the ‘residence nil rate band’. It will be gradually phased in over the next 4 years and by 2020 will be worth an additional £175,000 per person. The existing allowance of £325,000 combined with the additional £175,000 means a new allowance for property owners of £500,000 – or £1m for couples.

Taking steps to minimise the amount of inheritance tax that will be charged on your estate through careful investment and planning maximises the value of the assets that pass to your loved ones.

Reviewing your finances and planning for inheritance tax as early as possible increases the options that are available to mitigate the amount of inheritance tax that will have to be paid on your assets.

Inheritance tax planning can ensure that there is sufficient cash or a specific asset available to pay the inheritance tax liability avoiding your executors having to make difficult decisions about how to pay inheritance tax for example by selling property or realising investments.

We can review your assets to advise you how to arrange your assets to make efficient use of the spouse exemption
We can advise you how to maximise use of the transferable nil rate band and new residence nil rate band
We can look at lifetime Trusts to protect family wealth and businesses
We can advise you how to maximise use of rules on lifetime gifting including gifts out of surplus income
We can check your qualification for available reliefs or exemptions, such as business property relief or agricultural property relief
We can advise on your personal annual allowances including gifts of £3,000 per tax year per person and wedding or civil ceremony gifts of up to £1,000 per person (£2,500 for a grandchild or great grandchild, £5,000 for a child)
We can draft your Will
We can prepare your property and financial affairs Lasting Power of Attorney
We can look at reducing a beneficiary’s Inheritance Tax burden with a deed of variation or disclaimer.

FAQ

Costs

If you would like Inheritance Tax advice, please contact Rebecca Bristow on 01548 288008 or at rb@startpointlaw.co.uk