Inheritance Tax and Estate Planning

Careful planning can reduce the inheritance tax payable on your estate and allow more of it to pass to the people you choose.

We advise on making full use of the available allowances and exemptions, on lifetime gifts and on the use of trusts, so that your estate is dealt with in line with your wishes.

Understanding Inheritance Tax

Inheritance tax is generally charged at 40% on the value of an estate above the nil-rate band of £325,000. A number of reliefs and exemptions can reduce the amount payable, and with planning many estates can reduce their liability substantially.

Ways to Reduce Inheritance Tax Liability

We can help you:

• Make Full Use of Allowances: Use the nil-rate band and residence nil-rate band effectively, including any unused allowances of a late spouse or civil partner.
• Use Trusts: Hold assets for your family in a way that may reduce tax and keeps control over how they pass.
• Make Lifetime Gifts: Use the gift exemptions and the seven-year rule.
• Leave Charitable Gifts: Gifts to charity are exempt, and leaving at least 10% of your net estate to charity reduces the rate on the rest of the estate to 36%.
• Write Life Insurance in Trust: So that the payout falls outside your estate.

Nil-Rate Band and Residence Nil-Rate Band Explained

Everyone has a nil-rate band of £325,000. If your home, or a share in it, passes to your children or grandchildren, an additional residence nil-rate band of up to £175,000 may be available. The residence nil-rate band is gradually withdrawn for estates worth more than £2 million. Unused allowances can pass to a surviving spouse or civil partner, so a married couple may be able to pass up to £1 million free of inheritance tax.

How Trusts Help with Inheritance Tax Planning

Depending on the type, a trust can offer tax advantages as well as control over how and when assets pass. Common options include:

• Discretionary Trusts: Flexibility to provide for future generations as circumstances change.
• Life Interest Trusts: Income or a home for a surviving spouse, with the capital protected for children.
• Property Protection Trusts: Often used by couples who own their home as tenants in common, to protect a share of the property for children while the survivor continues to live there.

Gifting Strategies to Reduce Inheritance Tax

Lifetime gifts can reduce the value of your taxable estate. Common exemptions include:

• Annual Exemption: You can give away £3,000 each tax year free of inheritance tax.
• Small Gifts: Gifts of up to £250 per person each tax year, to anyone who has not received part of your annual exemption.
• Wedding Gifts: Up to £5,000 to a child, £2,500 to a grandchild and £1,000 to anyone else.
• Potentially Exempt Transfers: Larger gifts become free of inheritance tax if you survive for seven years after making them. Tax on gifts made three to seven years before death may be reduced.

Transparent Pricing for Tax Planning Services

We offer clear, upfront pricing tailored to your needs:

• Basic Estate Review: From £350 + VAT
• Trust Setup Packages: From £750 + VAT
• Comprehensive Inheritance Tax Planning: From £1,250 + VAT

Contact us for a quote.

Why Choose Us for Inheritance Tax Advice?

• Accredited Practice: We are accredited under the Law Society's Wills and Inheritance Quality Scheme.
• Advice Tailored to You: Recommendations based on your family, your assets and your wishes.
• Clear Explanations: We explain each option and its consequences in plain English.
• Clear Fees: We agree our fees with you before work begins.

Arrange an Estate Planning Appointment

Inheritance tax planning is most effective when it starts early. Contact us to arrange an appointment to review your estate and the options available to you.

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