Inheritance Tax Planning

With the current threshold set at £325,000, an increasing number of estates are falling liable to Inheritance Tax (IHT). But through simple estate planning and taking advantage of the reliefs and exemptions available, exposure to IHT can be reduced or even eliminated.

We will discuss with you potential planning opportunities, some of which include:

• Using your 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). There is no required survivorship period.
• Making larger gifts: Whatever the nature or size of the gift, if made more than seven years before you die, it is exempt from IHT. For gifts made between three and seven years before you die, “taper relief” may apply if your estate is chargeable for IHT, meaning that tax is charged at a reduced rate.
• Getting married or entering into a civil partnership: If you leave your estate to your long-term partner, IHT will be charged on your death and again on their death. If you marry him/her, the spousal exemption will apply and the whole of your estate, however large, will pass tax free on your death, even if you die within a few days of the marriage or civil partnership.
• Consider investing in assets qualifying for IHT relief: Certain business and agricultural assets attract 100% relief from IHT after two years of ownership. This may be something to consider, perhaps where there is a fair chance of surviving two years but not seven. It is imperative that you take expert advice in this regard, and the attractiveness of the relief would need to be counterbalanced by the degree of investment risk involved.
• Make gifts to take your remaining estate below £2,000,000.00: Many people have drifted into the IHT net purely as a result of increasing property values. To soften the blow, the Government introduced an additional residence nil rate band, which is currently £175,000.00. For a married couple, this means that on the second death, the estate may benefit from a total nil rate band of £1,000,000.00. This is provided the estate contains a home (or the proceeds of sale of a home if the couple/survivor had downsized or, perhaps, sold up and moved to a nursing home and the home is left to “qualifying descendants”).

Life Insurance Policies: You should ensure that any life insurance policies are properly in trust and that nomination forms for any death in service benefits in relation to your pension(s) are both in place and reflect your current wishes and circumstances.

“Imogen Moran has looked after my family’s affairs for some time. She is a very good person; a good lawyer, a good listener, most understanding and makes me feel very much at ease.” M.D.L, Client