At Elite Law, our team of experienced inheritance tax planning solicitors regularly assist clients with arranging their financial affairs in the most tax efficient way possible.
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Making provision for your loved ones after you have gone is an essential part of managing your estate and assets.
Inheritance tax (IHT) is the tax placed on the estate (including property, possessions, and any other financial assets) of a person after they have died. IHT is usually only applied to estates valued at more than £325,000; however, if you are administrating an estate below that value you will still need to report it to the HMRC.
The standard IHT rate is 40%, which is applied to any portion of the estate above the minimum threshold. This means that if your estate is worth £400,000 and the standard threshold applies, you will pay 40% tax on £75,000, which makes for a £30,000 tax bill.
From this example, it is easy to see how IHT can cost you large amounts, especially on higher-value estates. There are a number of ways to reduce the potential costs you incur, and you should seek the advice of a knowledgeable legal expert should you have any doubts about the rules and regulations around inheritance tax and exemptions.
Our inheritance tax planning solicitors possess the knowledge and experience to ensure that you are able to take advantage of all the available options, keeping your inheritance tax liability of your estate to an absolute minimum.
We regularly act for clients in Buckinghamshire, Hertfordshire and throughout the UK.
If you are concerned about the inheritance tax that will be applied to your estate, there are a number of exemptions you can take advantage of during your lifetime that will allow you to transfer portions of your estate without being taxed.
Gifting portions of your estate in this way not only minimises the tax you will have to pay but also has the added benefit of allowing your loved ones to benefit from your estate sooner, while you are still alive and able to see them doing so.
You are allowed to make one IHT-free gift of up to £3000 per year, with no limit on the number of times you make this gift. You can also carry this allowance forward one year, meaning you can choose to gift £6000 every two years if you would prefer.
Small Gifts Exemption
You can make small gifts of up to £250 per year to as many recipients as you like. As long as you do not give one person more than £250, you can distribute as much cash as you wish and can continue to do so every year.
Wedding Or Civil Partnership Gifts
If a friend or relative is getting married or entering into a civil partnership, you are allowed to give them an IHT-free financial gift. The specific amount you are allowed to give without incurring IHT changes depending on your relationship to the recipient: if they are your child, you can give up to £5000; your grandchild or great-grandchild, £2500; and anyone else you can gift £1000 IHT-free.
Gifts Out Of Income Exemption
If you make gifts regularly (for example annually) to one person, they can be exempt from IHT if they come from your regular income. This does not have to mean your wage but can also mean your pension, dividends, or interest from investments or savings accounts. As long as the gift does not affect your lifestyle, it can be made free from IHT.
As with the other exemptions listed, it’s important to note that inheritance tax is determined after your death, but can be retrospectively applied to gifts made during your lifetime if it is determined that these gifts should have been subject to IHT. For this reason, you should be careful to ensure that regular gifts only come out of your income, that you can afford them, and that your intentions are clearly recorded within your will.
Other Lifetime Gifts
There are many other ways to distribute your estate in order to benefit from inheritance tax exemptions. Gifts or bequests to charities, foundations, political parties or educational institutions can be IHT-free, while business owners may be wholly or partially exempt depending on their specific status.
How Our Inheritance Tax Planning Solicitors Can Help
To find out exactly how inheritance tax will affect you and how best to make IHT-free gifts to minimise this impact, you should talk to a solicitor with experience in trust laws and tax exemption.
Our private client solicitors have extensive experience helping clients with estates of all sizes structure their assets in as tax-efficient a way as possible. We offer a comprehensive and knowledgeable service, drawing on our firm’s expertise in property law and estates administration. Below are some examples of our past cases:
Advising many high net worth clients in relation to their wills, trusts and lifetime gifts, frequently in conjunction with an appropriate financial advisor.
Advising beneficiaries of estates regarding variations of wills to reduce the inheritance tax due from an estate. In a recent case where two closely connected people had passed away less than 2 years apart, a deed of variation in the first estate meant that there was no inheritance tax due from the second estate which would otherwise have had a substantial tax liability.
Our services are cost-effective and competitive, and we will always give you a clear indication of our charges. We are happy to provide one-off advice at certain points of the legal process or on particular areas of concern as they arise.
An experienced private client solicitor will have an initial consultation with you, free of charge, to discuss your situation in more detail. Once we understand your circumstances better, we can provide you with a clearer understanding of how we can help you. We will also provide you with a price quotation and a choice of funding methods at the outset.
“Simply superb, professionally treated by Meg Wilton and at a reasonable cost.”
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“Extremely kind, thoughtful and knowledgeable.”
“They did a very small tax-related job for us. Perfectly happy with the service we received.”
“Recommended to those who wants a quick, efficient, reliable and first class service. My solicitor did a wonderful job. If you are seeking a quick and top class standard. I personally recommend Mrs Danielle Syed.”
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“Meg Wilton has been dealing with my late father’s estate and probate. I recommend her services whole heartedly. She has been sensitive, efficient and impossible to fault. Plus the costs were far far lower than some others quoted. I’m a busy GP and it has made life a lot easier. Highly recommended.”
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