ESTATE PLANNING AND INHERITANCE TAX

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Professional financial planning is the process which aims to help you realise your ambitions - whatever they may be. As professional financial advisers we can help you make informed decisions about your financial future, in the short, medium and long term.
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Wealth, just like your health, must be carefully preserved. Your assets need to be protected against the potential threats of erosion by taxation, the effects of inflation and investment risks.
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When you retire you still need food and shelter as an absolute minimum, but of course you will want to maintain the lifestyle to which you have become accustomed, so unless you can guarantee a large inheritance or windfall, then you need to provide yourself with a secure income for the rest of your life.
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Are you concerned about Inheritance Tax (IHT)?

We will work closely with you to understand your potential inheritance tax liability and devise a plan to help you mitigate any tax. We understand that our clients have often worked hard to amass their wealth, which is why it’s ever so important to protect any inheritance for the next generation.

There is normally no tax to be paid if:

The value of your estate is below the Nil Rate Band (NRB) of £325,000, or
You leave everything above the threshold to your spouse or civil partner, or
You leave everything above the threshold to a charity.

How do you value your estate?

To value your estate your beneficiaries will need to:

List out all assets and work out their value at the date of death
Deduct debts/liabilities.

Assets include items such as money in a bank, property and land, jewellery, cars, shares and jointly owned assets.

Our Top Tips for Reducing Inheritance Tax

Annual exemptions and reliefs This includes the annual allowance of £3,000 (which can include your previous year’s allowance, so £6,000), small gifts allowance of £250 and gifts in consideration of marriage and unlimited gifts to charities.

Lifetime gifts to your beneficiaries Classified as ‘Potentially Exempt Transfers’, they will fall outside of your estate after surviving seven years from the date of gift. Whilst there are no limits on how much you can gift, you will lose access to these funds.

Making gifts into Trusts There are various trusts that prove useful in reducing inheritance tax on death. Some trusts provide more flexibility and some allow access to either income or capital in the future, should this be required.

Investing in Qualifying Shares: Alternative Investment Market (AIM) Some investments qualify for Business Property Relief (BPR) and receive full inheritance tax relief once held for a period of 2 years.

Increasing your pension funding An area that can often be overlooked in reducing inheritance tax is pension funding. Maximising your pension contribution not only builds security in retirement but also shelters these funds from inheritance tax.

Gifts from surplus income Gifts made from surplus income will be exempt from inheritance tax so long as these gifts are made from taxable income and your standard of living will not be affected.

* There is also an additional ‘main residence’ allowance (‘Residence Nil Rate Band’ (RNRB)), which applies if a person’s home is given to their children (including adopted, foster or stepchildren) or grandchildren. This is set at £175,000 (2022/2023) and is added to the IHT threshold providing a total allowance of £500,000 (2022/2023).