Inheritance Tax

Inheritance tax can be a significant burden on your estate, but with our expert guidance, you can take steps to minimise your tax liability and protect your wealth for future generations.

What is Inheritance Tax?

Inheritance tax is a tax on the transfer of wealth from one generation to the next. When someone passes away, their estate is subject to inheritance tax if it exceeds the tax-free allowance, which is currently £325,000. The tax is charged at a rate of 40% on the value of the estate above the tax-free allowance.

How can we help with Estate Tax Planning – Inheritance Tax?

Our Inheritance Tax service is designed to help you minimise your inheritance tax liability and protect your wealth for future generations. Our team of experienced professionals will work with you to understand your unique circumstances and develop a customised estate tax planning strategy.

What is the Nil Rate Band?

In the current tax year the Nil Rate Band is £325,000.

So, for example, if the Estate is valued at £400,000 there is no tax due on the first £325,000, but tax is payable at 40% on the remaining £75,000, resulting in a tax bill of £30,000.

What is the “Residential Nil Rate Band”?

In addition to the Nil Rate Band, from April 2017 an additional main residence nil rate band will be available to cover the value of the deceased’s home. Initially the additional nil rate band will be £100,000 per person rising to £175,000 per person by April 2020. The additional band can only be used where the property in question is left to the direct descendants of the deceased and not, for example, to a trust. There will be tapered withdrawal of the additional nil rate band for estates with a net value in excess of £2 million.

Exemptions and reliefs

Spouse Exemption – all outright gifts to spouses/civil partners domiciled in the UK are exempt from IHT, whether made during lifetime or on death. The spouse exemption is limited to £325,000 if the person making the gift is UK domiciled and the recipient is non-domiciled.

Charity exemption – all outright gifts to qualifying charities, whether made during your lifetime or on your death, are exempt from IHT.

A gift to charity can also reduce the IHT rate from 40% to 36% on the remainder of your chargeable estate.

Regular gifts out of surplus income -any regular gifts made out of excess net income are exempt from IHT. These gifts must not affect your normal standard of living; otherwise the Revenue will deny the claim for this relief.

Annual Exemption – an individual can give away up to £3,000 each tax year. If not used or fully used in one tax year, the unused part may be carried forward for one tax year.

Small Gift Exemption – you can make gifts of £250 to any one individual each tax year. The number of individuals is unlimited.

Wedding and Civil Partnership Gifts – a parent may give £5,000, a grandparent £2,500, anyone else may give £1,000 free of IHT.

 

Our services include:

Inheritance Tax Planning

We can help you develop a comprehensive inheritance tax planning strategy that takes into account your unique circumstances, assets, and liabilities. We will work with you to identify tax-efficient solutions that can reduce your inheritance tax liability, such as trusts, gifts, and reliefs.

Estate Administration

We can provide guidance and support to executors and administrators in the administration of an estate. We will ensure that all inheritance tax obligations are met, and the estate is distributed according to the wishes of the deceased.

Trust Planning

We can help you establish and manage trusts to protect your wealth and minimise your inheritance tax liability. Trusts can be an effective tool in estate tax planning, allowing you to transfer assets to future generations while retaining control and flexibility.

Lifetime Gifts

We can advise you on tax-efficient lifetime gifts, which can help reduce your inheritance tax liability. Lifetime gifts can include cash gifts, gifts of property, and gifts into trusts.

Why Choose SMH Wills & Probate for Inheritance Tax planning?

At SMH Wills & Probate, we have a team of experienced estate tax planning professionals who specialise in inheritance tax. We understand the complexities of the tax system and can provide guidance and support throughout the estate tax planning process.

We take a personalised approach to estate tax planning and will work with you to develop a customised strategy that meets your unique needs and goals.

We are committed to providing transparent and straightforward advice, ensuring that you have a clear understanding of your inheritance tax liability and the available tax-efficient solutions.

Contact Us Today

If you are interested in learning more about our Inheritance Tax services, please contact SMH Wills & Probate today to schedule a consultation.

Our team is dedicated to helping you minimise your inheritance tax liability and protect your wealth for future generations.