The great thing about planning ahead is that you give yourself time and the peace of mind to significantly lessen your Inheritance Tax bill, whilst also ensuring you have enough money to live and enjoy life now. 

Our financial advisers can help create a succession plan to pass on your assets most effectively, and work with you to mitigate your future Inheritance Tax bill.

Inheritance Tax is currently charged at 40% on everything within your estate over your nil-rate band allowance. This is currently £325,000 per individual with a married couple able to pass assets to each other tax free. Fortunately, with the right planning, there are also many ways to manage, reduce or eliminate your Inheritance Tax bill when passing onto the next generation.

The Residence Nil-Rate Band is an additional allowance for passing on the family home and, with the help of a financial adviser, you can check if your estate qualifies for the residence nil-rate band. The maximum amount available currently is £175,00 per individual but this gets tapered is the total estate value is over £2million.

Every individual in the UK has an annual allowance for making monetary gifts to family and friends. However, Inheritance Tax gifting is a complex area due to strict rules set by HM Revenue & Customs. Understanding how to make gifts that won’t create additional Inheritance Tax implications is essential. There are several ways you can give financial gifts, including a gift for a wedding, civil partnership or Birthday or even a regular payment from your income.

Our Independent Financial Advisers have the ability to create in-depth cash flow modelling so you can assess the and create a plan for gifting whilst ensuring you are comfortable and financially secure throughout your life.

The main focus on pensions are as a tax efficient wrapper to save for your future as a source of retirement income, but they can also be a powerful tool in estate planning. Your pension will usually be exempt from Inheritance Tax and anyone can inherit them. As such, if you reduce the usage of your pension, you can pass on more tax-free wealth whilst also reducing the size of your taxable estate.

Investments in assets qualifying for the business property relief (BPR) can alleviate Inheritance Tax on the succession of these assets at a rate of 50% or 100%. This can be very beneficial if you don’t want to give away large sums of money in your lifetime, or if you want the inheritance you leave to grow over time. As a Wealth Manager, we have portfolios that can reduce your Inheritance Tax exposure by 100% after 2 years. This benefits you as you do not need to gift away your investments meaning you retain full control should you ever need the money as well as having a much shorter timeline than gifting to fall outside of your estate for Inheritance Tax. 

BPR-qualifying investments are considered high risk and the value, and any income from it, can fall as well as rise. Investors may not get back the full amount they invest. Tax treatment depends on individual circumstances and tax rules could change in the future. Tax relief depends on portfolio companies maintaining their qualifying status. We can guide you through the options and help determine which, if any, are appropriate for you.

Trusts come in different forms and can be used to protect your assets whilst also minimising your tax. Life insurance can also be set up in a trust, so that the money can be accessed immediately to pay an Inheritance Tax bill.

Our Independent Financial Advisers can advise you on the benefits of trusts and help you decide which are the right fit for you based on your goals and objectives. The Financial Conduct Authority does not regulate tax or trust advice. The value of your investment and any income from it can go down as well as up and you may not get back the full amount you invested.

A will is important as it not only ensures your estate is passed on according to your wishes, but it can also affect your estate and Inheritance Tax position. For example, did you know that anything you leave to charity in your will is free from Inheritance Tax. Will writing is not regulated by the Financial Conduct Authority.