It may come as a shock to discover that a large proportion of your wealth might be subject to inheritance tax (IHT) when you die.
This includes all your assets such as the family home, investments, life assurance plans not in Trust and even old family heirlooms.
Your estate will be subject to IHT if, on death, it exceeds the individual nil-rate band (NRB) which currently stands at £325,000.
There is also a Residence nil-rate band with details below.
As the family home often makes up a large percentage of an estate, the government introduced an additional allowance on top of the £325,000, known as the ‘residence nil-rate band’ (RNRB).
The current residence nil-rate band is up to £175,000.
Therefore, calculating how much your family will have to pay is often, although not always, simple.
Count up the value of all the assets, subtract the NRB and the RNRB, if applicable, and what is left will be taxed at up to 40%..
If your spouse dies before you without fully using their NRB, the unused amount can be carried forward to use when you die.
This means that if you leave the home you lived in before you died to your children (including adopted, foster or stepchildren) or grandchildren, they won’t have to pay IHT on the first £500,000 (£325,000 nil rate band + £175,000 residence nil-rate band) of its value if they sold it.
If you are a married couple or in a civil partnership then you can combine both your NRBs, meaning that up to the first £1,000,000 of your assets, including your property are not charged IHT.
The RNRB allowance does depend on the value of your property and so , as with most things in life, it’s rarely as simple as the example we’ve given. There’s a lot of complicated rules and calculations to follow when you’re working out how much IHT your family will have to pay, but we’re here to help.
The levels and bases of taxation and reliefs from taxation can change at any time. The value of any tax relief depends on individual circumstances.
Why not get in touch and arrange an appointment to speak about your inheritance tax planning needs?
Careful IHT planning is all about passing as much of your estate as possible to who you want to receive it, rather than to HMRC.
It’s also about maintaining flexibility and control over any arrangements that are made.
This area of planning can save your beneficiaries a lot of money and is an area we specialise in and are passionate about. We are very happy to do an assessment to show you your actual liabilities and to help you to maximise allowances.
Why pay tax on money you have already paid tax on in your lifetime? Plan to mitigate this, the government have given you many tools and I’ll help you to assess this.
The levels and bases of taxation and reliefs from taxation can change at any time. The value of any tax relief depends on individual circumstances.
Draw up a Will and ensure it properly expresses what you wish to happen to your wealth. We can help you plan it correctly to save the maximum amount of tax.
Will writing involves the referral to a service that is separate and distinct to those offered by St. James’s Place. Wills are not regulated by the Financial Conduct Authority.
You can reduce the total value of your estate by giving your family financial gifts while you’re still alive.
There are products available that enable the beneficiaries of your estate to meet any potential IHT tax liability without disturbing family wealth.
A Trust provides the flexibility, creativity and control that a Will alone might not.
You could be forgiven for thinking that estate planning is about what happens to your assets after your death. And while, to a certain extent, that is true, it’s also about organising your wealth now to ensure you maximise its effectiveness – whether that’s to safeguard and benefit your loved ones or minimise the impact of taxation.
Providing wealth for future generations and earmarking funds for specific family members.
Preserving wealth which may otherwise be diluted due to divorce or bankruptcy of a beneficiary.
Mitigating Income Tax, Capital Gains Tax, or Inheritance Tax (IHT).
Avoiding delays in obtaining a Grant of Probate.
Say for example you want to make a gift to a minor or someone you do not believe is sufficiently responsible, you may prefer to retain some control over it either until the beneficiary reaches a certain age or until you decide that the recipient is sufficiently mature.
This can be achieved by using a suitable trust structure. I can help you to understand if they are appropriate for you.
The levels and bases of taxation and reliefs from taxation can change at any time. Tax relief is dependent on individual circumstances.
Trusts are not regulated by the Financial Conduct Authority.
* Will writing involves the referral to a service that is separate and distinct to those offered by St. James’s Place. Wills are not regulated by the Financial Conduct Authority.
The value of an investment with St. James’s Place will be directly linked to the performance of the funds you select and the value can therefore go down as well as up. You may get back less than you invested.
The levels and bases of taxation, and reliefs from taxation, can change at any time. The value of any tax relief depends on individual circumstances.
To arrange a meeting, call us on 07770 361 292. Or send us your contact details and we will get back to you.