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Planning to pay less Inheritance Tax

By planning ahead when making your will or setting up a trust, it can be possible to reduce the amount of Inheritance Tax applicable to your estate.

The primary method of minimising the amount of Inheritance Tax due is to reduce the size of your estate by disposing of assets in such a way that is beneficial to you and your loved ones. Bringing your total estate value below the nil rate band (£325,000 by default), will eliminate the requirement to pay any Inheritance Tax.

It is also possible to reduce the amount of Inheritance Tax payable from 40% to 36% by leaving a legacy donation of at least 10% of your estate’s net value to a charity.

If you are concerned about the amount of Inheritance Tax that your beneficiaries are likely to be faced with, our solicitors can provide practical advice on:

  • Gifting money, property or shares to loved ones in a will or a trust
  • Lifetime gifts
  • Potentially exempt transfers (PETs)
  • Bequeathing business ownership
  • Charitable legacy donations

Each of the above actions can all be effective methods of reducing the amount of inheritance tax payable.However, it is important to note that some of these options will need to be in place at least 7 years before death in order to be valid.

Our inheritance tax solicitors utilise their expert legal knowledge to maximise the amount that you leave behind.

Our in-depth knowledge of the laws surrounding inheritance tax issues, combined with our ability to tailor our advice to any individual’s circumstances, allows us to provide you with the most cost-effective options available to you.

We will explain in detail the advantages and consequences of any inheritance tax reliefs and exemptions that you may be entitled to, which will enable you to maximise the value of the estate that you leave behind for those you love.

With one of the largest private client teams in the Midlands, we have extensive experience in providing inheritance tax advice.

We regularly advise individuals and families on all aspects of tax planning, from lifetime estate planning through to the use of trusts and gifts, through to advising beneficiaries on how best to manage their inheritance after the death of a loved one.

Complex and international inheritance Tax planning

Estate planning is not always straight forward. It often involves sensitive personal, religious, or cultural issues. Our Wills, Probate, Tax & Trusts team is well-known for providing meticulous advice on matters such as:

  • Agricultural inheritance and succession planning
  • Transferring tax-free allowances to spouses
  • Making lifetime gifts and potentially exempt transfers
  • International Inheritance Tax
  • Filing of Inheritance Tax returns
  • Appealing Inheritance Tax decisions with HMRC or at a tax tribunal
  • Business Property Relief and Agricultural Property Relief exemptions

How much inheritance tax will I pay?

Inheritance Tax is applied to the value of an estate above the £325k nil rate band threshold (increasing to £500k if your home is left to your children or grandchildren in a will or trust in estates worth under £2m).

For example, an estate worth £500k would be charged £58.8k (40% of £175k), and an estate worth £2m would be charged £670k (40% of £1.675m).

Are there any other tax implications to be aware of?

There may also be stamp duty or Capital Gains Tax to be paid on your property, businesses or any shares sold after death (if they have increased in value). Although, as stamp duty and Capital Gains Tax do not apply until these assets are sold, it may be worthwhile considering entrusting the ownership of such assets to your beneficiaries in your will or trust, rather than the sale value.

It is important, however, to remember that any assets that can potentially provide a source of income (for example properties for lease, businesses, and shares) may be subject to income tax for the beneficiary who receives and continues to operate them.

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