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The importance of good inheritance tax planning advice

Our experts can provide you with advice on inheritance tax planning 

While it’s not always possible to predict what lies ahead, the redistribution and taxation of your wealth is an inevitability. With this in mind, smart inheritance tax planning is important and it makes sense to consider it sooner, rather than later.

In this article, we’ll answer questions from ‘what is inheritance tax planning?’ to ‘how can I reduce inheritance tax payable on my estate?’…

What is inheritance tax?

Levied after death, inheritance tax must be calculated and paid on the value of your estate and assets – your property, money, and possessions. 

We are often asked: ‘what amount do you pay inheritance tax on?’. Currently, there is a nil-rate band – or tax-free threshold – of up to £325,000. This means that if the total value of your estate is below £325,000, there will be no inheritance tax to pay. In addition, if you leave everything above the £325,000 threshold to your spouse/civil partner, a charity, or a community sports club, then there is also no tax to pay.

If you pass your home to your children (including adopted, foster or stepchildren) or grandchildren then the tax-free threshold can rise to £500,000. Likewise, if your estate is worth less than £2 million. 

How to work out inheritance tax

There are some factors that impact on the tax due but, in general, the standard inheritance tax rate is 40% on the part of your estate that’s above the threshold. 

For example, if your estate is valued at £500,000 – and your tax-free threshold is £325,000 – then the inheritance tax charged will be at 40% of £175,000.

To gain an overview of this, we recommend looking at the Inheritance Tax section of the Government website for a clear and up-to-date explanation of the calculation. Alternatively, you may wish to visit the HMRC Inheritance Tax calculator.

What is inheritance tax planning?

You may have wondered whether it is possible to reduce the inheritance tax liability to avoid paying substantial tax on the wealth you’ve already been taxed on once.

Careful inheritance tax planning can indeed help limit the tax burden faced by your loved ones and other beneficiaries, on your death. For example, if you leave everything to your spouse or civil partner, no inheritance tax will be payable and your nil-rate band of £325,000 will remain unused. If this is the case, it will pass to your partner and double their allowance to £650,000.

Another way to minimise your inheritance tax liability is by giving gifts to your beneficiaries during your lifetime, although numerous restrictions apply.

Other exemptions, or ways you may diminish inheritance tax, include:

  • Donating to charity 
  • Taking out life insurance 
  • Setting up a trust
  • Making regular ‘gift’ payments
  • Avoid dipping into your pension to reduce your estate’s value

The chances are, inheritance tax will be payable on your estate which can significantly reduce the amount that you leave to your loved ones and other beneficiaries. As inheritance tax planning advisors, we can offer advice and guidance on the best way to organise your personal assets 

What are the main benefits of estate and inheritance tax planning advice?

With numerous exemptions and reliefs that may be available to you, a consultation with an inheritance tax planning expert will help you navigate your way through this complex subject. 

Effective tax planning can minimise the liabilities due on your hard-earned assets, therefore maximising your beneficiary’s inheritance. 

A tailor made wealth succession plan – which includes estate and inheritance tax planning – will also enable a seamless transition to your chosen beneficiaries.

Why choose us for inheritance tax planning advice?

We believe that, when you’ve spent a lifetime building your assets, it is important to put your affairs in order. 

We are proud to have earned a reputation for providing both companies and individuals with the reassurance of professional, independent services. When it comes to inheritance tax planning, our clients benefit from: 

Expert insight – robust inheritance tax planning ensures that you pass on as much of your wealth as possible, when the time comes. 

Tailored solutions – our services can be relied upon to meet the most demanding and complex situations. We will guide you and provide bespoke suggestions, whether your estate is close to the tax-free threshold or many times larger.

Wealth protection – we offer strategies which could allow you to mitigate the tax that would potentially be due on family homes, family businesses and investment portfolios.

Balanced approach – estate planning is not solely about reducing tax burdens. We adopt a pragmatic position to ensure that your personal financial needs are always met. It is important to avoid the temptation to give away ‘too much, too soon’.

Our experienced but friendly accountants offer a range of robust and responsive services, tailormade to meet your needs. As well as offering sound inheritance tax planning advice, we also provide support and guidance on a number of other associated private client matters, including:

For tailored advice on inheritance tax planning

If you’d like to speak to one of our experts about reducing inheritance tax liabilities on your hard-earned assets then contact us today, on 020 8946 1212.

Here at Hartley Fowler Chartered Accountants, we offer a free initial consultation where we listen to your specific concerns and then provide a competitive fixed quote for your consideration – there is no obligation to proceed.