Inheritance Tax planning
Effective inheritance tax planning can make a significant difference to the legacy you leave behind. By making full use of the tax reliefs available, setting up trusts, and considering options such as gifts or charitable donations, you can reduce the amount of inheritance tax due on your estate.
This means more of your wealth passes directly to your loved ones, helping to ensure your family and chosen beneficiaries are provided for in the way you intend.
How Moore can help with Inheritance Tax planning
The Inheritance Tax experts at Moore in Peterborough, Corby and Northampton can advise on all areas of tax planning including:
- Reviewing your Wills to ensure they are tax efficient
- Advice on business structures and the availability of IHT reliefs
- Making use of available tax reliefs and exemptions
- Annual tax-free gifts
- Lifetime gifts
- The use of trusts
- Charitable giving
- Planning for changes (e.g. the IHT rules for pensions)
Keeping your estate plans up to date – whatever changes come
Inheritance tax rules can be complex, and both your personal circumstances and the legislation itself may change over time. That’s why our inheritance tax experts keep your plans under regular review, ensuring they always reflect the latest rules as well as your current situation.
This means you can be confident that your estate is structured in the most efficient way possible, taking full advantage of all available allowances and reliefs, so the amount of inheritance tax due after your death is legally minimised and your loved ones receive the maximum benefit.
Inheritance Tax FAQs
Inheritance tax (IHT) is the tax paid on the net estate (money, property, personal possessions including vehicles less any liabilities) of someone who has died. If the value of the estate is below the IHT threshold or you leave everything above the threshold to your spouse, civil partner or charity then you don’t usually need to pay Inheritance Tax.
The current UK Inheritance Tax Nil Rate Band threshold is £325,000. This means that the first £325,000 of your Estate is tax-free. You may also be entitled to a Transferable Nil Rate Band and/or Residential Nil Rate Band in certain circumstances.
Any lifetime gifts would need to be considered when calculating the Nil Rate Band available to an estate.
Inheritance tax can also be payable on gifts into trust or close companies in some circumstances.
The standard Inheritance Tax rate is 40%. You only pay IHT on the portion of your taxable estate (i.e. not covered by any reliefs or exemptions) that exceeds your available Nil rate Band IHT threshold.
Example:
Your net estate is worth £500,000. You have made no gifts in the 7 years prior to death and have no residential or transferable nil rate bands available. Inheritance Tax is only charged on the portion of the estate above the Nil Rate Band threshold (currently £325,000).
In this example the Inheritance Tax due is calculated as follows:
£500,000 – £325,000 = £175,000
40% of £175,000 = £70,000 IHT due within 6 months from the month of death.
There are effective tax planning strategies that you can put in place to reduce the amount of Inheritance Tax that needs to be paid.
There are effective tax planning strategies that you can put in place to reduce the amount of Inheritance Tax that needs to be paid.
Some of these can be actioned through your Will (for example, the estate can pay a reduced rate of Inheritance Tax of 36% on some assets if you leave 10% or more of the net estate’s value to charity).
Due to the 7-year rule for lifetime gifts considering an IHT strategy early is recommended.
Taper Relief may be available where you survive 3 years from the date of a gift.
Reliefs such as Business Property Relief and Agricultural Property Relief are available on qualifying assets.
Gifting money, property, shares or other investments into a trust can reduce the amount of inheritance due on your estate.
This is a complex area, so getting advice from an Inheritance Tax specialist is recommended.
Talk to us about Inheritance Tax planning today
If you would like to find out more, or to get a bespoke quote, please contact us by email at east.midlands@mooreuk.global, fill in our contact us form or call one of our offices:
- Corby: 01536 461900
- Peterborough: 01733 397300
- Northampton: 01604 654254