Inheritance Tax Planning

Inheritance Tax (IHT) – Estate Planning
Everyone has an opinion on inheritance tax.
Maybe you don’t want to pay a penny more than you absolutely have to.
Perhaps you take the view that tax is a moral duty and that anything you pass on after tax is a bonus.
Whichever your view point, we can talk through your options and consider what might work for you.
There are 4 main strategies to dealing with inheritance tax:
1) Spend it. By spending money, you can reduce the value of your estate. By enjoying yourself, each £1 you spend may save your beneficiaries 40p
2) Insure your bill. There are insurance products that aim to provide a lump sum on death. That could be used to pay the inheritance tax bill
3) Gift it away. The Government gives annual allowances for gifts. These may immediately fall outside of your estate. For bigger gifts there are rules that mean they can be removed from your estate over a set period.
4) Invest it. There are specific investments where holding for at least 2 years can see a tax rate of 0%.
Each have their own merits and pitfalls.
Spending it can be a double-edged sword. Say you spent the money on a new conservatory. If it increases the value of the house more than the price you paid for it, you’ve made the problem worse!
Insurance can be very expensive as the premiums will depend on your age and health. If you have any underlying medical conditions, you may find that insurance does not fit your plan.
Gifting has to be ‘without reservation’. To make a gift work, you would need to be so comfortable that you never need this money and can afford to give it away. You will need to live for at least 7 years for the money to full leave your estate.
Certain assets can qualify for Business Property Relief after 2 years of investing. The Government decides what is permittable and what isn’t. These investments tend to be higher cost that more mainstream investments. They can also be harder to sell (less liquid).
The Financial Conduct Authority does not regulate taxation and / or trust advice
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