Inheritance Tax Planning

Why we do it

HMRC will try to charge you 40% Inheritance Tax on everything they can. We help all families and clients to navigate Inheritance Tax laws and reduce their tax liability.

What we do

This is critical as the new tax law, the RNRB (Residence Nil Rate Band),  is not given automatically and has to be claimed for your children. The Inheritance Tax threshold has been frozen since 2009 at £325.000. If the estate’s value is below this threshold you still need to report it to HMRC. The £325,000 limit has been frozen until at least 2020/21, while the additional main residence allowance will be fully phased in over the next three years. When you die, HMRC assess how much your estate is worth, then deducts your debts from this figure to give the value of your estate.

Your assets are everything you own including:

• Cash in the bank
• Investments
• Any property or business you own
• Vehicles
• Payouts from life insurance policies and pensions (unless assigned into a trust)
• Cash in the bank and ISA’s

The BIG question… how much tax do you pay?  Your estate will owe tax at 40% on anything above the £325,000 inheritance tax threshold when you die (or 36% if you leave at least 10% of your entire estate to a charity). Utilise your annual ‘small gift’ exemptions. Each person can give up to £3,000 every year. You can also give an unlimited number of small gifts up to £250. You can gift, out of income, as long as the amount clearly does not affect the donor’s standard of living. i.e. it is an amount that is ‘easily affordable’. This has to be proved to HMRC. Pension income can be assigned to benefit your dependents.  Life Assurance plans can be written into a trust. Note: Inheritance Tax thresholds depend on each individual’s circumstances and any new legislation that may come in.

Our IFA Partner can check these details for you. Just ask us.

The basic Inheritance Tax allowance is unchanged.

Couples can leave a home worth £650,000, if they both own it, without it attracting inheritance tax (singles £325,000). Above this threshold, the charge is 40%. The basic Inheritance Tax allowance is unchanged; what has changed is the introduction of a new ‘residence nil rate band’ allowance (RNRB).

How does the new ‘residence nil rate band’ work?

This is new and started from the 2017/18 tax year. The Residence Nil Rate is only valid on a main residence and where the recipient of a home is a direct descendant (classed as children, step-children and adopted children). This is gradually being phased in and is potentially claimable on top of your existing allowance.

There are two types of Inheritance Tax allowance now:

• The first is the Nil Rate Band, automatic if you are over eighteen years of age. This was frozen at £325,000 in 2009 and will not increase with inflation until after 2021.
• The second allowance, called the Residence Nil Rate Band, has to be claimed but only if you have children, step children or adopted children and you pass your main residence in which you have lived ( from 5th April 2015) DIRECTLY to your own children.

If you do not own your own home or have children of your own you cannot claim this allowance.

Many wills written before 2017 do not qualify your executors to be able to successfully claim this allowance. This allowance reduces by £1 for every £2 when the total value of your estate is over £2m. People with such high estates lose this allowance completely. We guarantee all our wills can qualify your children for this additional allowance.

Who we do it for

Anyone looking to reduce their Inheritance Tax Liability. WE GIVE A FULL INHERITANCE TAX ASSESSMENT and suggest ways in which you can legally reduce your liability.

The results you can expect

We offer a free advisory service on your old wills.

We will create your own personal will, including any trust that you may need.  Making a will is the only way to ensure that your wishes are carried out.

These new laws are very complex and you need professional advice.

Most importantly, we help you navigate these recent Inheritance Tax laws to ensure your will helps reduce Inheritance Tax liability and takes advantage of any new legislation. We are specialist advisers and guarantee you will not pay 40% tax on un-necessary Inheritance Tax.

What to do now

Please call Sarah on 020 3858 0307  to book your free phone consultation or to arrange for Jeff Meers to visit you at your home or if you prefer at our office by Victoria station.