inheritance tax planning
Having spent your life building your saving, not many people are happy to see a large chunk going to HMRC when they die.
The good news is with time for a little planning the amount of inheritance tax due can be reduced or even eliminated, leaving more for the people you want to benefit.
There are two main approaches which we can help you with.
Either reducing the value of your estate. This can be done through a combination of methods, using alternative investment types which are free from inheritance tax, by gifting money now, using the inheritance tax exemptions available either directly or through using trusts.
Or ensuring money for the amount of the inheritance tax is available to the people who would need to make the payment.
If you’re looking for more information right now then please read on.
These are some of the facts we take into account when developing a personal plan for you.
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use the inheritance tax exemptions available to you
There are a whole range of allowances available and if you are able to give money gifts now you can use the following allowances without there being any inheritance tax due. These are per person, so if you are a couple you can each use the allowances, potentially doubling the gift you can make.
Annual exemption £3,000 total gift to one or more persons. And if you didn’t use this allowance last year, you can use it this year in addition.
Small gifts £250 maximum per recipient to as many people as you want.
At Sapphire Financial Planning we are happy to explain how these allowances, plus other allowances available could personally benefit you and your family.
potentially benefit from the Residence Nil Rate Band
If you own your family home and it will be inherited by your direct descendants you can benefit from the residence nil rate band which is worth up to £175,000, frozen until April 2028. This means up to £175,000 of a property’s value can be free from inheritance tax.
For couples owning their main family home jointly, one person would normally inherit the whole house if one partner dies, without any inheritance tax implications.
When the 2nd person dies the residence nil rate band for both deceased people becomes available, meaning up to £350,000 of a property’s value can be free from inheritance tax.
At Sapphire Financial Planning we are happy to explain how this could personally benefit you and your family.
There is a tapered withdrawal of the residence nil-rate band where the value of assets owned by an individual at the date of death are more than £2 million. This will be at a withdrawal rate of £1 for every £2 over this threshold. But we can advise you if this applies to you.
use alternative investment types which are free from inheritance tax
At Sapphire Financial Planning we can advise you whether this type of investment would be suitable for you.
Don’t invest unless you’re prepared to lose all the money you invest. This is a high risk investment. You may not be able to access your money easily. The legislation and, as a result, the tax treatment will depend on individual circumstances, may change in the future and could apply retrospectively.
reduce the value of your estate by gifting money, either your existing savings or perhaps just any future investment grow your savings may have
You may be able to gift your savings now, or you may need your savings to live off. There are many ways you can plan to reduce any inheritance tax due on your death. We can help if
- you can afford to gift your savings now
- you can afford to gift your savings now but you do need an income from them
- you want to keep your savings but could gift any future growth your savings may have
- you may require care in later life and you need your savings to give you an income to pay for this if this happens
At Sapphire Financial Planning we can give you a personal plan explaining what your options are and what is best for you.
use trusts to gift money to your family
You can make money gifts now or use trusts to make the gifts available in the future. Whether there are any inheritance tax implications depends on the value of the gifts you would like to make, and what other gifts you have already made.
At Sapphire Financial Planning we can give you a personal plan explaining what your options are and what is best for you.
ensure money for any inheritance tax is available to the people who would need to make the payment
Any inheritance tax needs to be paid before the money in your estate can be accessed and this can be a problem for your beneficiaries. By arranging a life assurance policy in trust for the amount of the tax you can ensure the money will be there so your estate can be paid out.
At Sapphire Financial Planning we can give you a personal plan explaining what your options are and what is best for you
The value of an investment with St. James’s Place will be directly linked to the performance of the funds you select and the value can therefore go down as well as up. You may get back less than you invested.
The levels and bases of taxation and reliefs from taxation can change at any time. The value of any tax relief depends on individual circumstances.
Trusts are not regulated by the Financial Conduct Authority
The Partner Practice is an Appointed Representative of and represents only St. James’s Place Wealth Management plc (which is authorised and regulated by the Financial Conduct Authority) for the purpose of advising solely on the group’s wealth management products and services, more details of which are set out on the group’s website www.sjp.co.uk/products. The ‘St. James’s Place Partnership’ and the title ‘Partner Practice’ are marketing terms used to describe St. James’s Place representatives.