INHERITANCE TAX PLANNING
FINANCIAL ADVICE THAT’S AS UNIQUE AS YOU ARE
Did you know that more and more people are becoming liable to Inheritance Tax (IHT), yet it can be a mitigated tax. Even with the effective doubling of the IHT threshold for married couples (and civil partnerships) many people are still being caught by this tax.
Inheritance tax (IHT) is no longer a concern just for the wealthy. It is a growing worry for many people, especially homeowners who have benefited from growth in the value of their properties. Property is not the only asset that makes up a person’s estate. Your estate also includes: your contents and possessions, your savings and investments, your pension fund and any life insurance not in trust.
The threshold (nil rate band) has not kept pace with property inflation and as such, more and more people are falling into the trap of paying inheritance tax. IHT is payable at a flat rate of 40% on assets above the nil rate band. Unlike many other taxes though, there are plenty of things you can do now to make sure you pass as much of your wealth on to your family and friends, and not the taxman.
Making a Will
The first thing to do is to see a professional will writer or solicitor to make a will. There is no IHT payable between spouses, so if a partner dies and leaves his or her estate in full to the spouse, there is no tax to pay. It is the children who typically pay the inheritance tax liability after the death of both parents.
Will writing is not regulated by the Financial Conduct Authority.
Will writing is not part of the Quilter Financial Planning offering and is offered in our own right. Quilter Financial Planning accept no responsibility for this aspect of our business.
Specialised Trusts
Another means by which IHT can be minimised is the setting up of specialised trusts. These are legal documents that should always be drawn up by experts, usually barristers. Always consult a member of the Society of Trust and Estate Practitioners.
If the aim is tax-saving, it’s important to understand that, once assets have been placed in trust, your access to the money will be affected, so you will need to think carefully about what you can safely afford to give away. There are typically four types of trust in popular use at the present time: Interest in Possession; Life Interest; Discretionary; and Accumulation & Maintenance. Each type of trust does a different job and each comes with its own sets of pros and cons. The utilisation of trusts is the best way to minimise your exposure to IHT and if this has piqued your interest, your next step is to consult the legal profession.
Trusts are not regulated by the Financial Conduct Authority.
Gifting money away and lifetime allowances
Main exemptions
- Most transfers between spouses.
- The first £3,000 of lifetime transfers in any tax year (husband and wife each have own exemption) plus any unused balance from previous year.
- Gifts of up to but not exceeding £250 p.a. to any number of persons.
- Gifts in consideration of marriage to bride and/or groom of: up to £5,000 by a parent, up to £2,500 by a grandparent, or up to £1,000 by any other person.
- Gifts made out of income that form part of normal expenditure and do not reduce the standard of living.
- Gifts to charities, whether made during lifetime or on death.
Whole of life policies
Don’t pay more tax than necessary on your death. Call us today to put the right combination of policies in place for you in order to mitigate as much tax as possible.
OUR INVESTMENT SERVICES
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Discretionary Service
This service may be particularly suited to people who want to be kept up-to-date with their finances, but either do not have the knowledge or expertise to manage their own portfolio – perhaps because they lead busy day-to-day lives or because they are enjoying retirement and wish to travel.
The value of investments and the income they produce can fall as well as rise. You may get back less than invested.
Advisory Service
The advisory service is designed for people with all levels of experience who want to take an active interest and be in control of the construction and ongoing maintenance of their portfolio, but wish to take advice on the strategy employed and the assets to be held.
The value of investments and the income they produce can fall as well as rise. You may get back less than invested.
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