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Personal Financial Advice

Inheritance tax planning

Inheritance tax is a tax charged on certain transfers of value or gifts made during an individual’s lifetime and/ or on death. For the 2012/13 tax year, no tax is charged on the value of your estate up to £325,000. This is known as the ‘nil rate band’ and everything above that is taxed at 40%. Assets passed between spouses or civil partners are exempt from IHT (assuming the spouse or partner is domiciled in the UK), regardless of their worth and how soon you die after making them. These rules also apply to gifts made to charities.

How much inheritance tax might you pay?

(see table below)

The following will count towards your estate when calculating IHT:

  • Investments
  • Property
  • Pension (unless in a trust)?
  • Jointly held assets, your share of value is included in your estate
  • Gifts you have made but still benefit from, for example, a house you have given away but still live in
  • Assets held in trust from which you receive personal benefit
  • Certain gifts that you have made in the last seven years
  • Other assets such as furniture, art, jewellery, cars

Simply Ethical provides advice on Inheritance tax planning to minimise your estate’s liability and ensure that your family receive what they are entitled to. We will help you minimise your inheritance tax bill through drafting an effective will, making use of all the exemptions and reliefs. Trusts will also be considered where necessary to reduce or even eliminate your inheritance tax liability.

Value of your estate Inheritance tax liability
  Single person Married couple
£325,000 Nil Nil
£500,000 £70,000 Nil
£650,000 £130,000 Nil
£1m £270,000 £140,000
£1.5 £470,000 £340,000
£2m £670,000 £540,000

For more information on how we can help in this area, please contact us.

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