Tax Planning
Tax planning
No one wants hard-earned money to be lost to taxes. Inheritance Tax is a tax on the Estate – property, money and possessions – of someone who has died, and it can be a significant concern. But it does not apply to all estates, and there are ways to reduce your liability.
To protect your assets, seek advice from qualified and regulated experts. Our solicitors will provide clear guidance on the law and work to achieve the best outcome for you.
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Making the most of your allowance
Current rules
No inheritance tax is due on the first £325,000 of any Estate, then any amount above that is usually charged at the standard 40% Inheritance Tax (IHT) rate.
If you are married and leave everything to your spouse, there is normally no Inheritance Tax to pay. Further, your IHT allowance is combined with theirs and so on the death of your spouse, their Estate will benefit from an IHT-free allowance of £650,000.
Passing on your home can also boost your allowance as it may qualify for the residence nil rate band (RNRB), which is an additional allowance of £175,000 if you pass your main residence to your children or grandchildren.
Planning to reduce IHT
Effective lifetime planning and simple measures can reduce your Inheritance Tax liability. For more complex planning, we collaborate with trusted financial advisors to help you plan cost-effectively.
Beware of tax avoidance schemes
Be cautious of advisors promising unrealistic Inheritance Tax avoidance schemes. If it sounds too good to be true, it usually is.
Asset Protection Trusts and Property Protection Trusts come in two forms: Interest in Possession Trusts and Discretionary Trusts.
Trusts and taxes
Using Trusts for IHT planning can be beneficial, but transfers into a Trust may attract Capital Gains Tax and IHT.
If you transfer an asset into a Trust but retain its use, it may be subject to the Gifts with Reservation of Benefit (GROB) rules and Pre-Owned Asset Tax, unless you pay rent.
For expert advice on tax planning, contact us today.
