Inheritance Tax Planning
How can we help reduce your Inheritance Tax Liability?
Inheritance Tax is a tax paid on your property and belongings (estate) when you die. It has to be paid before probate is granted and the inheritance is released and can take a sizeable slice out of the wealth you wish to leave your family.
Your estate, for Inheritance Tax purposes includes:
- Your home and any other properties you own
- Your possessions
- Bank and Building Society accounts
- Insurance policies not paid out under trust arrangements
There are many ways our inheritance tax planning services can help minimise the tax payable on your death. For example, have your life insurance policy pay out into a trust rather than your estate. Many people will find their insurance is not written into trust therefore rather than potentially solving a problem, it is now causing a problem. Similarly, leaving legacy wills – donating a portion of your estate to a UK charity – can help reduce the tax burden, or simply just by gifting.
- Making gifts (if you make a gift and die within 7 years of making it, there may be Inheritance Tax to pay. These gifts are called “potentially exempt transfers”)
- Structuring Wills to minimise Inheritance Tax
- Business succession planning. One of the most valuable Inheritance Tax reliefs is Business Property Relief, which allows qualifying business assets to be passed to the next generation free of Inheritance Tax.
- Restructuring your inheritance plans following a marriage, or a divorce
- Structuring your affairs to make the most of reliefs
- Investments with favourable Inheritance Tax treatment
- Deeds of variation
The introduction of the Residence Nil-Rate Band is being phased in as follows:
- £100,000 for the tax year 2017/18
- £125,000 for the tax year 2018/19
- £150,000 for the tax year 2019/20
- £175,000 for the tax year 2020/21
It has also been confirmed that the existing nil-rate band will remain frozen at £325,000 until the 2021/22 tax year. The allowance applies to those estates that are “closely inherited” and contain a “qualifying residential interest” – this latter point means that the individual must have owned the property and have lived in it at some point. Therefore, with effect from 2017/18 tax year, if you give away your home to your children (including adopted, foster or stepchildren) or grandchildren, your threshold will increase to £425,000 or £850,000 for married couples and registered civil partners.
At Paradigm Wills and Legal Services, we will work with you to understand your situation and how your wealth is made up; we can then provide inheritance tax advice to help you plan and structure your estate to reduce your tax liability.
If you are an owner of a property portfolio and wish for advice around tax and restructuring this portfolio, then please get in touch with our inheritance tax specialists on 0800 999 7750.