Inheritance Tax MitigationLord Jenkins quoted, “Inheritance Tax is a voluntary tax, paid by those who distrust their heirs more than they dislike the Inland Revenue!” Now whilst this may not be true, that fact remains that with careful planning, potential Inheritance Tax liabilities can be considerably reduced or indeed, mitigated completely.

Without doubt, the first element of estate planning is the drawing up of a Will by a suitably qualified Solicitor or Will Writer to ensure that your family do not become embroiled in the long and drawn out intestacy process. If you do not make a Will there is no guarantee that your estate will be distributed according to your wishes.

Inheritance Tax (IHT) is the tax that you pay on the value of your estate on death if it exceeds a certain value. The IHT allowance for 2017/18 is £325,000. Married couples, or those in a civil partnership, may be able to use some of their spouse’s or partner’s unused IHT allowance on death.

The standard Inheritance Tax rate is 40%. It’s only charged on the part of your estate that’s above the £325,000 threshold. In addition, a residence nil rate band of £100,000 applies where a main residence is left to one or more direct descendants if the individual and estate meet the qualifying conditions. This figure will incrementally increase to £125,000 in 2018/19, £150,000 in 2019/20 and £175,000 in 2020/21. Where your estate exceeds the nil rate band consideration should be given to making lifetime gifts to your beneficiaries to reduce the value of your estate. The main issue for many people is of course affordability. Giving away control of capital at a time when income is often required can create an issue for the donor.

Where this is the case, a more complex strategy is required and can involve the use of various Trusts. We can advise in relation to many specialist trust arrangements including Discounted Gift Trusts, Loan Trusts and Reversionary Interest Trusts.

Where mitigation is not possible, or after careful planning an Inheritance Tax liability remains, the liability can be provided for by way of life assurance. Placing the proceeds into trust for the beneficiaries of your Will ensures the funds are available to meet the liability and gain probate, thus releasing your estate to your family in a timely manner

This is a complex area. If you require any further information about our estate planning or Inheritance Tax planning services please don’t hesitate to contact us.

Templegate covers the cost of the initial consultation.

Tax planning advice is not regulated by the Financial Conduct Authority, FCA.

So what next?

The only thing left for you to do is pick up the phone and call Templegate on 01264 300125 or 0345 833 8837, email info@templegatefinancial.co.uk or complete our enquiry form.

Templegate Financial Planning Ltd is an appointed representative of 2plan wealth management Ltd, which is authorised and regulated by the Financial Conduct Authority. 2plan wealth management Ltd is entered on the Financial Services Register under reference 461598. The FCA do not regulate will writing services or some forms of mortgages and Inheritance Tax planning. The information and content of this website is intended for UK consumers only and is subject to the UK regulatory regime. Templegate Financial Planning Ltd. Registered Office: Winton House, Winton Square, Basingstoke, Hampshire, RG21 8EN Registered in England No. 04416499.