Inheritance Tax Planning

Inheritance Tax is often referred to as the ‘voluntary tax’ as basic planning can often reduce Inheritance Tax liability to nil.  At Brumell & Sample, our estate planning specialists have extensive experience in dealing with families, farmers, and business owners who wish to reduce the Inheritance Tax payable on their death.

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Our Approach

With straightforward Inheritance Tax planning, you could save up to 40% tax on your death.  Most of us would prefer this saving to pass to our loved ones or charities of our choice, rather than to the taxman. 

How is Inheritance Tax calculated?

As a general rule, Inheritance Tax is paid on an individual’s estate (which includes property, money, listed shares, motor vehicles and other personal possessions) if the estate is worth more than £325,000 when they die.  Inheritance Tax is usually charged at 40% on anything above that. 

In April 2017, a new, additional threshold referred to as the ‘Residence Nil Rate Band’ was also introduced. If you own a property, or share of, at the date of your death (or if you have downsized, certain provisions also apply), and you leave a share of your estate to ‘direct descendant’s, which includes your children and grandchildren you may also be eligible for an additional £125,000 in Inheritance Tax Relief.  This amount is due to increase incrementally to £175,000 per person by 2020/2021.  

Straightforward steps to reduce your tax liability include rearing your assets or your will to take advantage of the spousal exemption or charity exemption when making gifts, or when deciding how to dispose of our assets on death.  This can include certain trusts that allow us to appoint trustees to control our assets after death, and still take advantage of the spousal exemption. 

Business owners and farmers can also gain 100% or 50% Tax relief on their business or agricultural assets.  Certain provisions apply, and we would be happy to explain this to you in a straightforward manner. 

There are also reliefs available when gifting your assets during your lifetime.  For example, each individual can gift £3,000 per annum (i.e. to a child or into a trust).  If a gift is made over this amount, you must generally survive for 7 years before the gift is ‘outside’ of your estate for tax purposes. Other exemptions may apply, however, which we can explain to you. 

Next Steps

We will be happy to discuss this and any other matters with you.  The first step is to contact one of our highly experienced and specialised team on 01670 512 336 or email to find out how we can help you with Inheritance Tax planning.