Inheritance Tax Planning
The ability to protect your wealth for future generations is a fundamental principle in our client strategy.
There is no one simple solution for Inheritance planning. It is first imperative to understand the issues arising if you do nothing. Solutions can vary widely depending on your personal views however most people prefer their assets not be taxed further when they have died.
As with all plans, flexibility to allow for changing circumstances is key. There are a variety of options available to mitigate Inheritance Tax (IHT). We will arrange a tailored solution to suit your circumstances taking note of any need for income or access to capital.
1. Gifting
Small gifts can be exempt, larger gifts may be exempt after seven years.
You can make gifts to certain people and organisations without having to pay any Inheritance Tax. These gifts are exempt whether you make them during your life or as part of your will.
Examples of certain gifts are:
- Your husband, wife or civil partner, as long as they have a permanent home in the UK
- Lifetime gifts of £3,000 per tax year gifted to another individual
- Lifetime gifts of £250 per tax year gifted to any number of individuals
2. Investment
Dependant on the asset and trust structure these can provide exemption or relief over a given time period.
3. Insurance
Having calculated the overall estate tax liability, the creation of a life assurance written in trust will enable the beneficiaries to settle the relevant tax liability when probate is attained.
4. Equity release
A popular method of creating a debt in the estate by releasing capital from property, often the main residence. This can then reduce the taxable estate on death providing the released capital has been spent or gifted.
Gifts that you give to your unmarried partner, or a partner that you’re not in a registered civil partnership with, are not exempt.
5. Charitable Donations
Most charitable donations are exempt from Inheritance Tax.
Reliefs
Individuals may benefit from various reliefs that exist to reduce Inheritance tax, some examples of these are:
- Business property relief – qualifying businesses can pass down through the generations without facing IHT.
- Agricultural property relief – qualifying agricultural businesses can pass down through the generations without facing IHT.
For an initial enquiry or a comprehensive financial review please email enquiries@pennymatters.co.uk
