Estate Planning

Inheritance Tax mitigation

The first thing you should realise is that Inheritance Tax (IHT) is no longer just a tax on the rich and many people with even modest assets could find themselves caught in the dilemma of knowing that their dependants will face the prospect of paying taxes on their estate.

The first step you need to take is to ascertain what your current IHT liability would be. We can then work with you to establish a number of approaches and allowances that can effectively mitigate your potential inheritance tax liability, including gifts, trusts and inheritance tax efficient investments. You might not be aware that some of the investments and insurance policies that you already own could afford significant IHT benefits. We can help identify them for you.

Inheritance Tax Mitigation is a complex area requiring specialist advice if you wish to make a significant reduction to your potential inheritance tax liability. Our Individual Wealth Management Consultants have a thorough knowledge of Inheritance Tax mitigation techniques and are able to provide guidance on this often complex subject.

Exemptions and Allowances

Tax exemptions and allowances play a large part in tax planning and where available must be used. Some of the main exemptions and allowances are

  • Transfers between husband and wife are free from capital gains tax and inheritance tax.
  • Each taxpayer can earn £6,475 in income before they have to start paying tax in the 2010/11 tax year. In 2011/12 you can earn £7,475 before paying income tax.
  • The first £10,100 of any capital gains is free from capital gains tax in the 2010/11 tax year. (2011/12 £10,100))
  • Gifts of up to £3000 can be made by an individual to any other individual per tax year with no liability to Inheritance Tax. If unused this allowance can be carried forward one year.

Wills

Should you die without making a Will you are classed as “intestate”. If you die “intestate”, there are certain rules which will determine how your estate should be allocated - and will probably not be what you would have intended. It is therefore important that you make a Will even if you feel you do not have many possessions or much money. It is also important that you review it regularly as your circumstances, or legislation or tax rules, change.

We can help you determine exactly what you should do, either to ensure your estate is passed to the correct people or to mitigate estate taxes as part of our Individual Wealth Management Service.