Inheritance Tax and Estate Planning

Passing your wealth on to future generations

Inheritance Tax planning can be complicated, but with the help of a financial adviser, you can begin to understand some of the best ways in which you can maximise the wealth you transfer to future generations.

Our financial advisers will help you by using a combination of effective strategies to minimise the future inheritance burden for your family, creating peace of mind for the future and for your loved ones.

Why is it important to start planning Inheritance Tax early?

By planning ahead, you can significantly mitigate your Inheritance Tax bill, while also ensuring you have enough money to live and enjoy life now.

Our expert financial advisers can help create a succession plan to pass on your assets most effectively, and work with you to reduce or manage your future Inheritance Tax bill.

Reducing your Inheritance Tax bill

Inheritance Tax is currently charged at 40% on all your estate over your nil-rate band allowance. Fortunately, there are many ways to manage, reduce or eliminate your Inheritance Tax bill, including:

• Residence nil-rate band (RNRB)

The RNRB is an additional allowance for passing on the family home and, with the help of a financial adviser, you can check if your estate qualifies for the residence nil-rate band.

• Trusts

Trusts come in different forms and can be used to protect your assets and minimise tax efficiently, while allowing you to influence how they’re managed and who will benefit from them. Life insurance can also be set up in a trust, so that the money can be accessed immediately to pay an Inheritance Tax bill.

Our independent financial advisers can advise you on the benefits of trusts and help you decide which are the right fit for you based on your goals and objectives.

• Making financial gifts to family and friends

Everybody in the UK has an annual allowance for making monetary gifts to family and friends. However, Inheritance Tax gifting is a complex area due to strict rules set by HM Revenue & Customs. Understanding how to make gifts that won’t create additional Inheritance Tax implications is essential. There are a number of ways you can give financial gifts, including a gift for a wedding, civil partnership or Birthday or even a regular payment from your income.

Our financial experts can help you estimate your future finances and find the best strategy to maximise your annual gifting allowances.

• Passing on a pension

Pensions are often seen as a source of retirement income, but they can be a powerful tool in estate planning. Your pension will usually be exempt from Inheritance Tax and anyone can inherit them. So, if you minimise the usage of your pension, you can pass on more tax-free wealth while also reducing the size of your taxable estate.

Contact our team of experts who can advise you on how to use your pension in succession planning while ensuring you’re ready for a long and comfortable retirement.

• Investing in BPR-qualifying companies

Investments in assets qualifying for the business property relief (BPR) can alleviate Inheritance Tax on the succession of these assets at a rate of 50% or 100%. This can be very beneficial if you don’t want to give away large sums of money in your lifetime, or if you want the inheritance you leave to grow over time.

Keep in mind there are a number of exception rules and investing in such companies can pose a higher risk, so it is always better to seek financial advice. We can guide you through the options and help determine which, if any, are appropriate for you.

• Writing a will

A will is important as it not only ensures your estate is passed on according to your wishes, but it can also affect your estate and Inheritance Tax position. For example, did you know that anything you leave to charity in your will is free from Inheritance Tax?*

We know that estate planning is a vital part of your financial planning journey. That’s why all of our advisers are qualified to offer you specialist advice and support on wills, trusts and your estate as part of AFH Trusts and Estate Planning.

*Will writing is not regulated by the Financial Conduct Authority.