Below is only a high level summary of inheritance and there are many other factors and additional rules that effect the way your estate is taxed and distributed. Full knowledge of the rules and your personal circumstances are essential before any planning is undertaken.

What is inheritance Tax?

Inheritance is normally paid upon death by the estate. It could be paid by you personally during your lifetime. And it also could have a tax rate of 40%.

What is the Inheritance Tax Threshold?

£325,000 (Nil rate band) each plus a further £175,000 (Residential nil rate band) towards a residential property (Subject to conditions). Husband and wife, Civil partners can also transfer the allowance between each other. Giving a couple with residential property and who qualify for the Residence nil rate band, a £1m allowance. (For estates above £2m the Residential nil rate band element of this allowance is reduced).

Should I be worried about Inheritance tax?

Inheritance tax reduces the amount of legacy that passes to your beneficiaries. If you want your beneficiaries to receive the value of your estate in their entirety this is something you should be very worried about.

What is included in Inheritance Tax?

Inheritance Tax is paid on all of the worldwide assets of UK domiciled individual above the nil rate bands that apply.

Can I just give my estate away?

Yes, but this has clear rules that you must understand before you embark on this, Gifts can form part of your estate for 7 years after the gift is made and can also trigger lifetime tax charges. Considerations about who controls the gifts in the future are a key part of this type of planning.

Why does my family have to pay the tax?

Because the value of your estate is above the permitted allowances that can be transferred tax free.

Can’t my estate just pay the bill?

Yes it can but this can be the most expensive way to settle the estate, with good advice its often possible to plan separate payments for tax at a reduced cost and in many cases with good planning no inheritance tax is ever paid.

Can I reduce my Inheritance Tax bill?

Yes, there are many ways to address inheritance tax liabilities. Use of annual allowances, Gifts out of income, Gifts of capital, Many different types of trust some offering access to income and/or capital and long term care can covered, Business relief planning. Different planning types offer either immediate, 2 year or 7 year tax mitigation.

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