In the UK, inheritance tax (IHT) is charged on your estate (property, money, possessions) after death. It is overseen by HM Revenue and Customs.
Your family could end up inheriting a lot less as a result. Inheritance tax is only due if your estate exceeds a certain threshold, but more estates are having to pay it because house prices have risen a lot over the past few years. Even if your estate is not liable to pay inheritance tax today, it could by the time you pass away.
Inheritance tax planning is about reducing the taxable value of your estate using the following legal strategies.
Gifting Assets Early
Using Trusts
Making a Will
Leaving Money to Charity
Using Allowances and Reliefs
Without planning, a large portion of your estate could go to tax. We can give you bespoke advice on ways to reduce your inheritance tax liability.
A Will sets out how you want your money, property, and possessions to be distributed after your death and allows you to appoint guardians for children under the age of 18.
We can’t predict when our time will come to an end. You’ve worked hard every day, putting in the effort to get where you are now. Ultimately, we want to share the results of our lifelong work with our loved ones. Giving the product of our life’s work as a gift is the biggest and best thing we can do – it’s everything we own. It’s crucial to make sure this is done right – by writing a Will.
At MapleWills, we understand the importance of Wills and estate planning. Our experienced and compassionate team is here to guide you through process, ensuring you have a legally sound Will that captures all your requirements .
We’re dedicated to making sure your legacy is preserved as you envision
Don’t wait to protect your family’s future. Contact us today.
At MapleWills, we understand the importance of Wills and estate planning. Our experienced and compassionate team is here to guide you through process, ensuring you have a legally sound document that captures all your requirements . We will talk you through writing your Will/Trust/LPA in clear cut, unambiguous language so you fully understand your options and make the right choices for you and your loved ones.
We write Wills/Trusts and LPA’s every day, and we will guide you towards choosing the most appropriate will for your circumstances, we are dedicated to making sure your legacy is preserved as you envision.
Maplewills complies with the strict industry rules and checks required. Alongside professional indemnity insurance, this will ensure you receive the trustworthy professional and confidential service you require. Don’t wait to protect your family’s future. Contact us today.
Inheritance tax is a tax on the estate of someone who has passed away. This estate could consist of property, businesses, money and personal belongings of value such as a vehicle or jewellery. If the value of the deceased’s estate is above the current threshold of £325,000 known as the nil rate band, the amount above it might be liable for tax at the current standard rate of 40%.
If no inheritance tax advice is taken when making your Will then there is a significant possibility that your estate will end up paying more inheritance tax than necessary.
Lifetime gifts are an important part of IHT planning. They can be an effective way of removing value from an individual's estate, which can reduce the amount chargeable to inheritance tax upon death.
Gifts can be made either to individuals or to trusts. Gifts to trusts can ensure individuals can retain control over assets and give a certain degree of asset protection; however, there may be tax consequences. If you are in good health and expect to survive for 7 years from the date of the gift, it will fall out of your estate, and the clock can start to tick again. It is always important to take advice as gifting assets can have other tax consequences.
There are various common mistakes, including gifts with reservation of benefit and not leaving your property in such a way to qualify for the residence nil-rate band relief available, but the most common mistake of all is failing to take the necessary advice to plan effectively.
There are a few exemptions and reliefs available, including the spousal exemption when the estate is left to a surviving spouse. If any part of the estate is left to a charitable institution, it will be covered by charitable exemption to the extent of the charitable gift, and additionally, if the gift amounts to 10% of the value of the estate, it will result in a reduced tax rate to 36%. Those who run their own businesses can rely on Business Relief.
Yes, as a matter of fact matters relating to tax planning should be reviewed regularly.
Tax implications for trusts and beneficiaries depend on factors such as the kind of trust it is, the value of the assets in the trust and who the beneficiaries are.
Under a bare Trust, any income and capital gains are treated as the income and gains of the beneficiary. Minor beneficiaries are still entitled to the personal tax free allowance (£12,570 in tax year 2023/2024). However, if the trust is created by a parent for the benefit of a child and the income received is £100 or more, then that income is taxed as if it belongs to the parent. This could mean the income is taxed at a higher rate.
Interest in possession or discretionary trust tax rates depend on the value and source of the income. Tax rates for income could be between 20% and 45%, and dividend income could be taxed between 8.75% and 39.35%.
Trusts are subject to capital gains tax on any gains that exceed the annual capital gains tax allowance. This allowance is half that of an individual.
Beneficiaries are liable to income tax on any income they receive from a trust; however, they can offset the tax which has already been paid by the trust. Beneficiaries are not liable for tax on distributions of trust capital.
Seeking professional advice on inheritance tax planning is advisable if the value of your estate on your death is likely to be above £325,000 as there could be an inheritance tax liability. Estates above the current threshold of £325,000 might be liable for inheritance tax at the standard rate of 40% on the amount above this threshold. Inheritance tax planning may reduce this tax liability, as certain beneficiaries such as charities, spouses or civil partners are exempt from inheritance tax. Also, leaving your primary residence to children or grandchildren may increase your personal allowance before you are liable for inheritance tax to £500,000. The inheritance tax rate of 40% could also be reduced to 36% if in your Will you leave at least 10% of your net estate to charity.
Estate planning and Inheritance Tax planning will involve a comprehensive review of your individual circumstances, needs, concerns and those of your family. Understanding where you are coming from and where you want to go is just as essential to the process as technical information and knowledge. The role can involve liaising with other professionals such as accountants and financial planners and can assist with helping to arrange your affairs efficiently; protecting assets for you and your family, preparing wills that suit your family, succession business planning, working with commercial advisors to ensure business and personal affairs work together and retirement planning to help plan the future so you can go ahead and enjoy life.
At Maple Will, we can devise tailored strategies and tax planning to help you minimise your tax liability legally. Our tax specialist member will be introduced to you
These strategies may include the use of Nil-Rate Bands, Residence Nil-Rate Bands, and other available allowances; one of the most common methods to use is lifetime gifting.
By using professional advisers, you can ensure that your wealth is preserved for future generations. It is therefore important that assets are protection and tax minimised. One effective method to achieve this is by establishing trusts, which allow for assets to be passed down according to your wishes while also reducing tax burden.
