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IHT and Estate Planning

Having worked hard to accumulate their wealth and achieve their financial freedom, many high net worth individuals are naturally keen to put in place the right plans and tax-saving strategies to ensure they leave as much of their estate as possible to future generations.

Putting the right strategies in place

We have an enviable track record of advising and assisting individuals in the mitigation of their tax liabilities, helping them to preserve and pass as much of their wealth as possible to their heirs.

We can help you to reduce the amount of IHT that would otherwise be payable. This can include measures to invest in tax-efficient share schemes or business ventures, giving away assets in your lifetime, taking out life insurance policies, setting up trusts, making gifts from your surplus income, maximising the use of your annual tax-free allowances, or giving money to charity.

As we always take a holistic approach to our client’s finances, the plans we help them put in place for the benefit of future generations always take account of their own ongoing financial requirements, such as the potential need to pay for elderly care. This is where our Lifetime Wealth Model can be particularly helpful to clients in tracking their income flows and assessing their overall capital position.

Download our IHT guide

How IHT is calculated

Inheritance Tax is paid if a person’s estate (their property, money and possessions) is worth more than £325,000 when they die. Your estate will owe tax at 40% on anything above the £325,000 inheritance tax threshold (or 36% if you leave at least 10% of your net estate to a charity).

Married couples and civil partners are able to pass their possessions and assets to each other tax-free (if UK-domiciled) and the surviving partner is allowed to use both tax-free allowances (when not utilised at the first death), effectively doubling their combined nil-rate band to £650,000.

The Residential Nil Rate Band

From April 2017, the residence nil rate band (RNRB), the residence nil rate band (RNRB), has applied if a main residence is left to a lineal descendant such as a child or grandchild, including adopted, step or fostered children.

The RNRB has increased and will reach £175,000 from tax year 2020-21. As the RNRB can be added to the existing threshold of £325,000, this would potentially mean an overall allowance of £500,000 per person or £1m for a couple who are married or in a civil partnership.

However, where a property is worth over £2m, the family home allowance (but not the individual allowance of £325,000) reduces by £1 for every £2 of value over £2m.

For further information on how we can help you build and protect your wealth, please contact us.

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