Don’t get caught out by Inheritance Tax

When we pass on, we would all prefer to leave as much of our wealth to our loved ones as possible. Even with a detailed will outlining our intentions, Inheritance Tax (IHT) can substantially reduce the amount our beneficiaries actually receive.

Research from Her Majesty’s Revenue & Customs suggests the number of estates caught by inheritance tax has more than doubled over the last ten years, particularly affecting those with professional vocations such as vets. However, by planning ahead, there are ways to limit the percentage of your assets the government is entitled to.

The Basics

If you are a UK Domicile, IHT is a tax that is applied to your estate when you die. Your estate is the total value of your assets (property, car, bank accounts, investments etc.), including those given away in the seven years prior to death, less any outstanding bills, debt or funeral expenses.

According to the current limits set for the 2009/10 tax year, the value of your estate up to £325,000 will typically be exempt from IHT. Above this ‘Nil Rate Band’, tax of 40% is usually payable. If you are married or in a registered civil partnership then in the event of one of your deaths, the deceased’s tax-free allowance will pass to the surviving partner, providing a total allowance of £650,000.

Certain gifts you make whilst you are still alive are exempt from tax, however the laws are strict in what constitutes a ‘gift’ and what doesn’t. These gifts are also subject to certain limits, which can be complicated.

Our Service

It is possible to substantially reduce the amount of IHT applied to your estate through suitable Trusts. A Trust lets you decide how assets should be distributed in the future, and can provide financial security for your loved ones.

Our team of Independent Financial Advisers are experts in assisting vets plan for Inheritance Tax, and limiting the amount applied. By setting up suitable Trusts, utilising the allowances you are entitled to and arranging appropriate insurance, we can assist you in ensuring as much of your assets as possible reach your family and others.

If you would like to discuss your requirements with one of our Independent Financial Advisers then please complete the enquiry form and we will contact you to assess your circumstances, review the tools available and then present options for you to consider.