Inheritance Tax Planning

Passing on the estate you’ve worked hard to build, in the way you want, to the people you want when you’re gone does not happen automatically.

If you do not properly plan what will happen to your assets when you die your loved ones could have to pay more inheritance tax (IHT) than needed.

Inheritance Tax is usually paid if a person’s estate (the sum total of all their assets) is worth more than £325,000 when they die.

More and more families are being stung with IHT mainly due to the rise in house prices over the years. So it’s important you know what the IHT allowances are.

Do I have an Inheritance Tax Allowance?

Everyone can pass on assets of £325,000 without being subject to IHT. This is known as the nil-rate band. IHT only applies to the value of an estate above £325,000 and is charged 40%.

Transfers between spouses and civil partners are exempt from IHT. If some or all of the nil-rate band is not used on the first death, the remainder can be transferred on the second death. This could potentially double the amount exempt from IHT to £650,000. However this does not happen automatically. That’s why it is important with a tricky subject like IHT we recommend you book an appointment to see one of the qualified Newcastle Financial Services Financial Planning Managers.

Unmarried partners, no matter how long-standing, don’t have automatic rights under the IHT rules.

Need some help or would you like to book an appointment?

Speak to a Financial Planning Manager

0345 600 4330

9am - 5pm Monday to Friday (local rate charge but calls from mobiles may cost more)

Inheritance tax (IHT) is payable on everything you have of value when you die, things like;

  • Your home
  • Any other properties or land – even if they are overseas.
  • Jewellery
  • Savings and investments
  • Cars

Is it possible to reduce my IHT liability?

There are ways you can reduce IHT such as;

  • Making a gift to your spouse or civil partner
  • Making a gift to your family or friends
  • Making a will
  • Putting things in a trust
  • Making a donation to charity    
  • Taking out life insurance

IHT doesn’t always have to be paid when you die. The Financial Planning Managers can talk you through some circumstances, such as using certain types of trusts, allowing it to be paid earlier.

Recent changes to IHT

In the 2015 summer budget the Chancellor announced a new transferable main residence allowance. This will increase from £100,000 in April 2017 to £175,000 per person by 2020/21. This is in addition to the £325,000 nil-rate band. This will effectively raise the IHT-free allowance to £500,000 per person. Married couples, who jointly own a family home and want to leave it to their children, will have a total IHT exemption of £1 million from April 2020.  

HM Revenue and Customs practice and the law relating to taxation are complex and subject to individual circumstances and changes which cannot be foreseen

Newcastle Financial Services Limited (NFSL) is an appointed representative of Openwork, one of the largest financial services companies in the UK. Openwork Limited is authorised and regulated by the Financial Conduct Authority. NFSL only provides 'restricted' advice. This means NFSL can only provide advice on products from a limited number of providers accessible through Openwork.