"Inheritance tax can lead to a substantial liability on death. This can be minimised by careful tax planning during life."
(also known as Inheritance Tax Planning)
A tax on assets of an estate and certain lifetime gifts
What is inheritance tax?
Inheritance tax (IHT) is a tax on assets of an estate when a person dies and on certain gifts made during his/her lifetime. IHT is paid if a person’s estate is worth more than the nil rate band threshold (currently £325,000) or if the estate plus any gifts in the seven years preceding death exceeds the nil rate band threshold. Careful estate planning is essential to lessen the impact of taxation, and I Will Solicitors can help you to minimise your IHT payments.
What rate of IHT is paid?
IHT is charged at 40% of any amount that exceeds the nil rate band, potentially leaving a substantial tax liability on death. The rate could lessen to 36% if 10% of an estate passes to a UK-registered charity after death, but this considerably reduces the value of the estate passing to your chosen beneficiaries. Also, the continued rise in property prices means that more and more people are crossing the IHT threshold and will often have taxable estates without realising.
When is IHT paid?
IHT is paid by the personal representative (either the executor or administrator) of the deceased’s estate from the funds from the estate. The initial IHT payment must be made within six months of the end of the month in which the deceased passed away – for example, if the deceased died on 15th June, the initial payment should be made by 31st December. If IHT is not paid until after this time, interest payments will begin to accrue. Where property forms part of an estate, the full IHT liability may be paid over 10 years, but it is important to receive IHT planning advice at an earlier stage to ensure that relevant deadlines are met.
Our inheritance lawyers understand the full importance of estate planning
The rules relating to IHT are constantly evolving and this is a complex area of law. Our inheritance lawyers have vast experience in IHT planning and can assist you to mitigate any IHT liability that may otherwise be payable. The liability can often be reduced to zero, but even if not, we are confident that tax savings can be obtained. There are various IHT planning methods we consider, including lifetime trusts, surplus income extensions, business property reliefs and gifting. We provide a tailored service and can prepare a full report on possible IHT, corporate gains tax and income tax planning options for individuals. This report will set out the pros and cons of the various methods of planning to be considered and advise on the best course of action.
It is not just tax that needs to be considered. We also advise on succession planning for assets using trusts in a manner which ensures that beneficiaries can gain from assets whilst allowing them to retain control.
Why Choose I Will Solicitors for inheritance tax and estate planning in the UK
We specialise in IHT and estate planning and our inheritance solicitors have more than 30 years’ experience in providing IHT planning solutions for individuals. We pride ourselves on the provision of a tailored service as per your requirements and we offer a free, no obligation initial meeting. For more information on estate planning, you can call us on 0121 603 0077 or email [email protected].