Estate Planning

The importance of Inheritance Tax planning and Estate Planning

No two individuals are the same. The value of your estate will vary according to what you have, how much it is worth, and where it is. Estate Planning enables you to mitigate Inheritance Tax by gifting assets during your lifetime and taking advantage of available exemptions and reliefs.

Inheritance Tax is a tax on the value of your estate on death. It is charged at 0% on the first £325,000 and this is known as the Nil Rate Band. If your estate is valued above this the excess is charged to Inheritance Tax at 40%. However, assets passing between spouses on death are exempt in their entirety.

Since October 2007, the executors of a surviving spouse can apply to the Revenue to transfer the unused Nil Rate Band of the first spouse to die. So for example, if first spouse leaves everything to the survivor, and the application to the Revenue is successful, then the survivor’s estate will be entitled to double the Nil Rate Band on their death. Lifetime gifts made within 7 years of death will reduce the available Nil Rate Band so planning is essential.

If you plan sensibly you can mitigate an Inheritance Tax liability by gifting assets during your lifetime; taking advantage of available exemptions and reliefs; or simply by ensuring you spend the lot before you go! You can also use insurance policies to cover the likely liability but these are not always available and may not be sensible for you personally.

In 2017 the Government also introduced something called the Main Residence Allowance.  This is a tricky piece of legislation but if you tick all the right boxes it means that an individual could also received an additional £175,000 of Inheritance Tax allowances.

Planning to mitigate tax needs careful consideration and often involves working closely with us, your accountant and your financial adviser.

If your estate is over £325,000 and you are worried about a big tax bill give us a call to have a chat about your circumstances.

If you need any more information call us on

01622 843729 

or email

Authorised by CILEx Regulation for

Probate Authorisation Number 2168365

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