Inheritance Tax & Estate Planning

The Shires team can help you ensure that your money and possessions go to the family and friends you choose.

Effective estate planning is about living your life to its fullest whilst making effective choices to pass on your assets in a way that limits an inheritance tax bill for your loved ones.

Effective estate planning can often save a vast amount of tax particularly that inheritance tax is charged at 40% on all assets above your allowances. therefore we always recommend that our clients take precautions and plan early as more of your assets are passed to your loved ones and not the taxman.

IHT planning is not a one size fits all service – it is often a process of combining several elements which may limit or eliminate any inheritance tax – these may include:

  • Pass on larger assets that are free of CGT
  • Making small gifts
  • Put assets in to trust
  • Using certain assets over others to provide income
  • Leave something to charity
  • Tax-efficient investments to benefit from Business Relief
  • Best of all Spend it

You may also consider taking out a life insurance policy to cover the cost of any potential IHT.

At Shires Accountants we know from our many years of experience that estate planning to manage inheritance tax is one of the most complicated areas of taxation and getting it wrong could be catastrophic for you and your loved ones. Therefore we offer a free no obligation meeting and would welcome the opportunity to discuss any requirements you may have call us on 01270 820273.

Some facts about Inheritance Tax

Inheritance tax is a tax applied to a person’s estate after death if the estate is worth over £325,000 which is your tax free allowance for IHT. In addition should you leave your property to your children or your grandchildren (including adopted, foster or step-children), you may gain an additional tax-free allowance of £175,000 (April 2020) this is called the Residence Nil Rate Band.

Therefore your allowance including property could be £500,000. Should you pass away but your estate does not utilise your full allowance any unused part of this amount may be passed on to a surviving partner.

What's included in the estate?

The value of your estate for the purpose of inheritance tax includes:

  • Your savings
  • Possessions including property
  • Subject to certain exemptions, the value of any money or property you gave away during the seven years prior to death
  • Certain pensions payments and lump sums may be attributed to IHT

What's exempt from Inheritance Tax?

The value of your estate for the purpose of inheritance tax includes:

  • If you leave your whole estate to your husband, wife or civil partner then no Inheritance Tax will be payable.
  • If a husband, wife or civil partner doesn’t use all of their £325,000 tax-free limit, then any unused part can be passed on to their surviving partner.
  • You don’t need to pay Inheritance Tax on anything you leave to charity.
  • If you leave 10% or more of your estate to charity, then a reduced rate of 36% tax may apply to what is left over.
  • Gifts of up to £3,000 in each tax year are exempt from Inheritance Tax, as are small gifts to individuals and some wedding or civil partnership gifts. However be aware, gifts made while you are alive could be liable for Inheritance Tax, depending how much they were and when they were given.

If you think your estate may be liable to inheritance tax when you pass away and are concerned about potential inheritance tax liability – Shires Accountants has the expertise to answer all your questions and make recommendations for your best financial future. So why not give us a call on 01270 820273 or complete the form below and we will get back to you.