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Home » Lifetime Planning and Wills » Inheritance Tax Planning

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Inheritance Tax Planning

Contact our Lifetime Planning and Wills Team on 01225 755656 or complete the Contact Form below.

Inheritance Tax Planning

With the threshold currently £325,000, many estates fall liable to Inheritance Tax (IHT). But through simple estate planning, including taking advantage of the reliefs and exemptions available, you can reduce or even eliminate your estate’s IHT liability.

“You have looked after my family’s affairs for some time. You are a very good person; a good lawyer, a good listener, most understanding and make me feel very much at ease.” MDL

Our specialist team will discuss with you potential planning opportunities, including:

IHT annual exemption

Using your IHT annual exemption, you can give away £3,000.00 per annum tax free (£6,000.00 if you have not used last year’s exemption, but this can only be carried forward for one tax year). There is no required survivorship period.

Gifting money to family members

Whatever the nature or size of the gift, if it was made more than seven years before you die, it’s exempt from IHT. In addition, for gifts made between three and seven years before you die, ‘taper relief’ may apply. So, if your estate is chargeable for IHT, it’s paid at a reduced rate.

Getting married or entering into a civil partnership

Leaving your estate to your long-term partner means IHT will be charged on your death and again on their death. However, if you marry them, the spousal exemption applies. Accordingly, however large, the whole of your estate passes tax-free on your death. And that applies even if you die within a few days of the marriage or civil partnership.

IHT relief

You might consider investing in assets qualifying for IHT relief. Specifically, some business and agricultural assets attract some relief from IHT after two years of ownership. So, this can prove worthwhile if, for example, there is a fair chance of surviving two years but not seven. However, the attractiveness of the relief will need to be counterbalanced by the degree of investment risk. But ultimately, you must take expert advice.

Residence nil rate band

Due to increasing property values, many people have drifted into the IHT net. So, to soften the blow, in addition to the IHT standard nil rate band (currently £325,000), the Government introduced a residence nil rate band (RNRB) in 2017.

The RNRB is available when you leave your home to direct descendants. Initially set at £100,000, the RNRB increased by £25,000 annually until it reached £175,000. In the same way as the standard nil rate band, any unused RNRB on the first death of a married couple or civil partners is potentially transferable. Consequently, for a married couple, this means that on the second death, the estate may potentially benefit from a total nil rate band of £1 million.

Life Insurance Policies

You should ensure that any life insurance policies are properly in trust. In addition, check that nomination forms for any pension death in service benefits are in place and reflect your current wishes and circumstances.

Your Inheritance Tax Planning Specialists

  • Rebecca Broom

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    • Office: Bath
    • Department: Wills & Probate
    • Role: Senior Associate
  • Justine Alford

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    • Office: Bradford on Avon
    • Department: Wills & Probate
    • Role: Senior Associate
  • Jenny Greenland

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    • Office: Trowbridge
    • Department: Wills & Probate
    • Role: Head of Private Client
  • Sarah Hickson

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    • Office: Bath
    • Department: Wills & Probate
    • Role: Senior Associate
  • Joshua Pugsley

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    • Office: Trowbridge
    • Department: Wills & Probate
    • Role: Consultant
  • Zoya Ustado

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    • Office: Trowbridge
    • Department: Wills & Probate
    • Role: Solicitor
  • Jenna Bennett

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    • Office: Trowbridge
    • Department: Wills & Probate
    • Role: Private Client Paralegal
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