Tax services
IHT
Leave them a little more
IHT planning or inheritance tax planning might not be at the top of your list right now, but taking the time to organise your financial affairs today could save your loved ones both money and stress down the line.
Your estate could include properties, possessions, money, and pensions. Inheritance Tax (IHT) is payable on anything over £325,000 – this is known as the nil rate band – unless you leave everything above this amount to your spouse or civil partner, a charity, or a community amateur sports club.
We’re here to help you make the best decisions for you and your chosen beneficiaries, reducing inheritance tax liability and ensuring as much of your wealth as possible goes to the people and causes you care about. Our expert advice includes practical strategies for lowering your inheritance tax liability and protecting your assets effectively.
Providing for the next generation
If you decide to leave your home to your children (including adopted, fostered, or stepchildren) or grandchildren, your threshold could rise to £475,000 thanks to the residence nil rate band. Plus, if you’re married or in a civil partnership and your estate is below your threshold, any unused nil rate band can be carried forward and added to your partner’s threshold when you pass away – potentially doubling the threshold to as much as £950,000.
The current standard inheritance tax rate is 40%, and it only applies to the portion of your estate above the threshold, not the whole estate. You might also qualify for a reduced rate of 36% if you leave 10% or more of your net estate to charity in your will.
We can guide you on how to keep your IHT bill as low as possible, whether you want to share your estate among several individuals, leave it all to your partner, or make a charitable gift. Making regular gifts or small gifts within the annual exemption limits can also be a valuable tool to reduce your inheritance tax liability.
Choosing your legacy
If you make any lifetime gifts or potentially exempt transfers within seven years prior to your death, these could become taxable. However, thanks to taper relief, the tax due reduces over time – for example, gifts made 6 to 7 years before death attract only 20% of the tax, while those made within the last three years face the full 40% charge.
If your will includes a business or shares in one, these will be counted as part of the value of your estate for inheritance tax purposes. Business relief or agricultural relief might reduce the tax payable on some business or agricultural assets by 50% or even 100%.
It’s also important to be aware that gifts made out of your income, as long as they don’t affect your living costs or standard of living, can be exempt from inheritance tax. Gifts to political parties with at least one Member of Parliament are also exempt.
Our inheritance tax planning and estate planning services are designed to ensure your loved ones and family beneficiaries are well looked after when the time comes. For professional advice or to discuss your individual circumstances, please contact us today. We are here to help you navigate the complexities of inheritance tax liability and ensure your estate planning suits your needs and the tax year regulations.
For advice on reducing your IHT liability, download our factsheet Utilising Your Pension to Cut Inheritance Tax.