Making the most of your money.
Planning with your goals at the forefront
The value of investments and any income from them can fall as well as rise and you may not get back the original amount invested.
Inheritance Tax Planning
When you pass away, a significant portion of your assets might be subject to Inheritance Tax (IHT), including your family home, investments, life assurance plans not in Trust, and family heirlooms.
Your estate will be subject to IHT if it exceeds the individual nil-rate band, which currently stands at £325,000. To calculate the IHT your family will have to pay, you need to count the value of all your assets, subtract the nil-rate band and the residence nil-rate band if applicable, and the remaining amount will be taxed at up to 40%, to be paid by your family.
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If your spouse dies before you and has not used their nil-rate band in full, the unused amount can be carried forward for use when you die. The levels and bases of taxation, as well as reliefs from taxation, can change at any time, and tax relief depends on individual circumstances.
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How does the residence nil-rate band work?
The residence nil-rate band, currently at £175,000 for 2024/25, is an additional amount on top of the £325,000, which applies if you give away your home to your children or grandchildren, who won't have to pay IHT on the first £500,000 of its value if they sold it. If you are married or in a civil partnership, you can combine both your nil-rate bands, meaning that the first £1,000,000 of your assets, including your property, are free from IHT.
IHT planning is crucial for passing on your estate to your chosen heirs rather than to HMRC while maintaining flexibility and control over any arrangements made. There are many complicated rules and calculations to follow, but professional help is available.
What to do about Inheritance Tax
Careful IHT planning is all about passing as much of your estate as possible to who you want to receive it, rather than to HMRC.
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It’s also about maintaining flexibility and control over any arrangements that are made.
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To discuss your options give us a call on 07841 029076 or email Samantha@tailoredmortgagesolutions.co.uk
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HM Revenue and Customs practice and the law relating to taxation are complex and subject to individual circumstances and changes which cannot be foreseen.
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For specialist tax advice, please refer to an accountant or tax specialist
Gifting & Trusts
Gifting
If you’re concerned about the effect that Inheritance Tax (IHT) will have on your estate and the amount of money you’ll be able to pass on to the people and causes you love, a Gift Plan may be an ideal addition to your wealth management strategy.
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Trusts
A Trust places the right money, in the right hands, at the right time. They provide the flexibility, creativity, and control that a will alone might not. You could be forgiven for thinking that estate planning is about what happens to your assets after your death. And whilst to a certain extent, that is true, it’s also about organising your wealth now to ensure you maximise its effectiveness – whether that’s to safeguard and benefit your loved ones or minimise the impact of taxation.
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Reasons for using a trust
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Providing wealth for future generations and earmarking funds for specific family members.
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Preserving wealth which may otherwise be diluted due to divorce or bankruptcy of a beneficiary.
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Mitigating Income Tax, Capital Gains Tax, or Inheritance Tax (IHT).
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Avoiding delays in obtaining a Grant of Probate.
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For example, you want to make a gift to a minor or someone you do not believe is sufficiently responsible, you may prefer to retain some control over it either until the beneficiary reaches a certain age or until you decide that the recipient is sufficiently mature.
This can be achieved by using a suitable Trust.
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HM Revenue and Customs practice and the law relating to taxation are complex and subject to individual circumstances and changes which cannot be foreseen.
For specialist tax advice, please refer to an accountant or tax specialist.