You may find the idea of discussing inheritance uncomfortable – putting it off until it’s too late. But seeking early professional advice is highly recommended, because passing your wealth on to the next generation effectively and efficiently takes careful preparation and skill.
Inheritance tax (IHT) affects you if you have an estate with total assets above the current IHT ‘nil-rate band’ of £325,000 (which potentially increases to £650,000 for married couples or those in registered civil partnerships). Your heirs will pay IHT at 40% on everything above this allowance and the Residential Nil Rate Band if your estate is worth more at the time of your death.
The nil-rate band is the amount you can leave without incurring an IHT liability – and 40% IHT is generally payable on everything you leave in your estate above this. Current increases in residential house values are leading to many estates being valued above the nil-rate band.
The Residential Nil Rate Band allows some or all of the value of the family home to be added to the IHT threshold. An additional main residence nil-rate band is also available to estates where a home, or part share, has been left to direct descendants.
We can help you with various options for holding your assets, such as setting up family trusts or the transfer of assets. Options can include:
- Gift Allowances annual amounts that can be gifted and not be counted as part of your estate if you die within seven years of making the gift
- Reliefs such as Business Relief and Agricultural Relief
- Annual gifting allowances
- Gifting from normal income
- Investments that qualify for business relief
- New pension freedom rules
- Life insurance to pay for any IHT due on your estate
- Gifts to charity
Past performance is not a guide to future returns. The value of investments can fall as well as rise. Investors may get back less than invested.