Inheritance Tax Planning (IHT)

Inheritance tax planning calculation and avoidance basics:

Should the value of your estate at the time of your death exceed £325,000 (this is known as the 'nil rate band' for the tax your 2009/2010) then the excess will be subjected to inheritance tax at 40%.

For example;

Value of estate:	£500,000
Nil rate band	£325,000
Excess:	£175,000
Inheritance tax bill:	£80,000

(Please note:  Since October 2007, married couples and registered civil partners can effectively increase the threshold on their estate when the second partner dies - to as much as £650,000 in 2009-10. Their executors or personal representatives must transfer the first spouse or civil partners unused Inheritance Tax threshold or nil rate band to the second spouse or civil partner when they die)

It is important to note that your beneficiaries will be required to settle the inheritance tax bill (IHT) in advance, before your estate can be distributed. In the case of the beneficiaries being minors this can cause a major problem. Proper Inheritance tax planning can help you to avoid this tax.

Transfers of property and gifts between husband and wife no matter how large in value are exempt from Inheritance Tax Planning (IHT). This is known as the inter-spouse exemption rule.

Certain small gifts to individuals are permitted and will reduce the size of the estate and IHT liability, however, in practice these are insufficient to have a major impact on the tax bill.

This is an incredibly complex area requiring bespoke financial advice.

Recent changes in tax allowances and taxation of trusts mean existing planning arrangements should be reviewed at the earliest opportunity.

For more information and details on these financial services simply complete our contact form and we would be happy to arrange a meeting to discuss, informally and confidentially, how our financial services can be of benefit to you.