Inheritance Tax and Estate Planning

Inheritance Tax and Estate Planning

Inheritance tax (IHT) is a tax on an individual’s estate upon death – which includes everything an individual owns, and a share of assets they own jointly. Inheritance tax can also apply to gifts or transfers made during an individual’s lifetime in certain cases.

With UK property prices rising significantly in recent years, more and more people have been drawn in to the scope of IHT, exposing some or all of their assets to tax at 40%. Good forward planning can help greatly reduce exposure to inheritance tax on your estate. In many cases, it can help you avoid inheritance tax altogether.
Property and assets that typically form part of your estate include
  • Your residential and any investment properties you may own
  • Other investments such as shares, bonds and mutual funds
  • Insurance policies
  • Payment from a pension plan or employee death benefit
  • Other assets such as cars, art, jewellery, furniture
  • If you have gifted assets away, but still benefit from them (e.g. you have given away your home but still live in it), these could still form part of your estate
  • Certain gifts that you have made in the last seven years
  • Assets held in trust from which you receive personal benefit
  • Your share of the value of jointly owned assets
IHT Mitigation Strategies
There are many planning ideas to help mitigate IHT, including:
  • Planned gifting of assets
  • Using spouse or civil partner allowances more effectively
  • Donating estate assets to charity
  • Using a variety of trusts
  • Using Business Property Relief (BPR)
  • Investment in other qualifying assets, such as EIS and SEIS
  • Having a well thought out Will in place
Other Issues to Consider
IHT is a major area of concern for many people in the UK. There are many other areas that are also of critical importance when planning your estate. Many of these are overlooked when planning tax mitigation. Areas to consider include:
  • Paying for long term care, with life expectancy rising each year
  • Having a an up to date Will to cover your estate
  • Planning continuing benefit for your children and grandchildren

If you would like to discuss planning or any of the issues discussed above please contact us on costas@gp-ca.com, call +44 2080234141 or fill out the query form here.

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