Inheritance Tax is paid if your estate (property, money and possessions) is worth more than a certain amount when you die.
The Inheritance Tax threshold (otherwise known as the Nil Rate Band) is currently £325,000 per spouse, plus a further £175,000 each, where your main residence is passed down to direct relatives. PLEASE NOTE that this additional allowance is subject to certain conditions.
There are many ways to reduce your Inheritance Tax liability and pass your assets onto family instead. All it takes is efficient planning.
I can talk through the options to help you choose the most appropriate strategy.
The most popular Trusts are as follows, though Trusts are not the only solution. Other potential solutions include Business Property Relief, Enterprise Investment Schemes, Venture Capital Trust, amongst other strategies. Careful consideration should be given to your personal circumstances before taking any action.
For more information call Keith Galgut on 07775 507 331.
The content of this page is for general information only and should not be considered advice. Information is based on our current understanding of tax legislation. Tax treatment depends on individual circumstances and may be subject to change in the future. Professional advice should always be sought prior to making any decisions or taking any action. All details were correct at the time of writting.
Discounted Gift Trusts
These allow you to put a lump sum into trust for your ‘beneficiaries’ - the people you’d like to receive the money. For maximum Inheritance Tax benefit you can't access the cash, but you can still receive the income that the money generates, often tax efficiently.
For the right client, Discounted Gift Trusts can be very Inheritance Tax efficient, allowing some of the gift to fall out of their estate immediately, with the balance becoming free of Inheritance Tax after seven years.
Wealth Preservation Trusts
Not dissimilar to Discounted Gift Trusts, Wealth Preservation Trusts also allow rolling access to your capital on pre-agreed dates. Any capital not taken can be rolled over to a future date.
You will have full access to the amount you put into Trust (known as the loan) which can be taken as a regular income or lump sum when required. Any growth in the Trust will immediately be outside of your estate. On death any outstanding loan is repayable back to your estate and may be liable to Inheritance Tax.
Loan Trusts
These schemes depend on a loan to a trust. As the allocated amount is a loan you retain full access to the capital, which remains in your estate.
Any growth in the trust should not be part of your estate on death, though if the growth is used to provide an income, it should be treated as loan repayments and consequently is unlikely to be taxed in the hands of the recipient.
Gift Trusts
If you have surplus capital that you know you will not need in the future, you could place this money into a Gift Trust. You will not have access to this money, it will be invested for the future and passed on to your chosen beneficiaries.
For more information call Keith Galgut on 07775 507 331.
The Financial Conduct Authority does not regulate Inheritance Tax and Trust advice
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