Inheritance tax (‘IHT’) is generally payable upon death and during the life of someone where they give away assets. IHT can be reduced significantly by tax planning in advance.
Everyone is entitled to an IHT free band of £325,000 and a husband and wife would therefore generally have no IHT to pay if their estate on second death is less than £650,000. While net estate values might be less than £650,000 now because of a mortgage or some other liability or loan, it is possible that at the time of death the estate will be worth much more when the debt has been paid off. Over the tax free bands, IHT is paid at 40% and so it is a significant tax charge levied on your assets.
With some careful planning and good advice, very significant reductions can be achieved in inheritance tax. It is vital however to plan in good time in order to achieve the maximum reduction in tax. We can ensure that you follow the most tax efficient route in planning a tax strategy. To achieve this we will need to meet with you to determine your personal circumstances. We will then produce a written report detailing the most appropriate strategy for your specific circumstances.
At HSC we can help with:-
- Advice on making full use of IHT relief’s such as gifts out of income.
- Advice on passing wealth down to the generation generations through potentially exempt transfers 7 years before death
- Ensuring your assets qualify for business property relief and/or agricultural property relief where applicable.
- Advice on drafting your will and giving to charity to lower the rate of inheritance tax payer.
- The use of Trusts
- Working together with our financial services team to swap assets that attract IHT into IHT free assets after 2 years
- Life assurance
- Assisting executors or their legal advisers in the calculation of IHT liabilities and their reporting requirements to HMRC