Inheritance Tax Planning (IHT)
Proactive, personalised estate planning is vital to protect your wealth and your family’s future by minimising the potential tax burden of inheritance.
Proactive, personalised estate planning is vital to protect your wealth and your family’s future by minimising the potential tax burden of inheritance.
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We’ll start with a full review of your estate to establish what may be subject to Inheritance Tax and where allowances or exemptions could apply.
From gifts and trusts to charitable giving, life insurance, and tax-efficient investments, we’ll identify the strategies that fit your circumstances and goals.
Our aim is to reduce the impact of IHT, safeguard more of your wealth for loved ones, and keep your plan up to date as tax rules and your situation change.
Your first meeting is all about you. Together, we’ll look at where you are now, where you want to be, and how to shape a clear plan to get you there. During your initial session, we’ll help you:
Understand what matters most to you and your life goals
Explore the opportunities and challenges in front of you
Explain how we would structure your personal wealth plan
We’re here to help you – no pressure, no jargon
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Ask a questionThe nil-rate band is the value of your estate that you will not be taxed on. This currently stands at a threshold of £325,000.
The government also introduced a residence nil-rate band. This applies when you give away the home you lived in before you died to your children (including foster, adopted, and stepchildren) or grandchildren. This is a band of up to £175,000.
So, when the residence nil-rate band applies, your children or grandchildren won’t have to pay IHT on the first £500,000 (this is the nil-rate band and the residence nil-rate band combined) if they sold the property.
The nil-rate band is the threshold for charging IHT. In other words, it is the amount you can accumulate without incurring inheritance tax.
The threshold is currently £325,000. You will therefore be charged IHT of 40% on any value over that amount.
Yes!
If you are married or in a civil partnership, you can combine both nil-rate bands, meaning that the first £1,000,000 of your assets (including property) are Inheritance Tax free.
The standard Inheritance Tax rate is currently 40% and is only charged on the part of your estate that is above the tax-free threshold (which currently sits at £325,000).
If you have made a will, IHT is usually arranged to be paid via a Direct Payment Scheme by your chosen executor.
If you do not have a will, the administrator of the estate will pay.
Inheritance tax normally needs to be paid before the probate can be issued.
Though, HMRC may accept staged payments where a property is concerned (until the property is sold).
There are other considerations to be made depending on your circumstances. Speak to a Financial Planner to get a better view of your situation.
The IHT threshold is known as the nil rate band. For the financial year 2023/24, the basic threshold is £325,000. After this, the tax rate is usually 40% on the ensuing amount.
Below this threshold, you pay no tax.
This refers to the nil rate band. For the financial year 2023/24, this band is £325,000.
Tax paid on gifts differs depending on when they were made.
If you make a gift 3 years before your death, you will be taxed at 40%.
Any gifts made 3 to 7 years before your death are taxed on a sliding scale called ‘taper relief’.
Any gift given before this 7-year period (e.g., gifts made 8 years prior to your death) are completely tax free.
There are a range of trusts which can be used to reduce IHT and help with your succession planning.
Generally, a 20% tax charge is due when setting up any trust where the assets exceed the current nil-rate tax band.
Exceptions may apply and charges are heavily determined by the type of trusts you set up.
There are several ways you can reduce the amount of Inheritance Tax due. It is important that you speak with a Chartered Financial Planner to assess which options are the best for you and your personal circumstances.
Some of the ways we may reduce IHT include (but are not limited to):
When you inherit property, you have three options:
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