Fiducia Wealth Management
Posted in Inheritance Tax on 12.12.12

However, putting this into context, if the nil rate band increased at an averaged RPI rate of 3% since 2009, it would be around £388,000 in 2015.  So in effect, more of your estate is exposed to potential tax than ever before.

The good news is you can act now to reduce the tax burden.  The most important factor in reducing exposure to paying 40% inheritance tax is to plan ahead using the simple exemptions and planning points that have served our clients well for generations.  We have highlighted some key actions for you to consider below.


There are a number of opportunities to make cash gifts that are not subject to a charge to Inheritance Tax, and will ultimately reduce the value of your taxable estate. Some of the more popular are shown below:

  • Annual exemption of £3,000. If it is not used, you can carry forward one year
  • Small gifts of £250. This must not be used in conjunction with any other exemption
  • Gifts on marriage:
    • £5,000 by a parent
    • £2,500 by a grandparent
    • £2,500 by a bride/groom
    • £1,000 by any other person
    • Gifts out of income. Variable amounts may be made, but they must be regular in nature, and made out of income without reducing your standard of living. This can be difficult to prove to HM Revenue & Customs and expert advice is essential.


Consider creating an Estate Plan

Estate Planning is the framework that transfers wealth to the appropriate beneficiaries, and includes the use of carefully created trusts, Wills and Powers of Attorney to deliver capital and/or income at the right time to the right people. Fiducia works closely with specialist law firms to design and establish coherent estate plans that provide flexibility and assurance, whilst minimising inheritance tax where possible.

Insure against the inheritance tax bill

Rather than leave your beneficiaries to sell the family silver to pay inheritance tax to HM Revenue & Customs, you can effectively pre-pay by arranging a life insurance policy to provide a capital sum to cover the expected tax.  It is vital to have the policy written under trust to ensure that the money paid out by the policy is outside your estate, otherwise the payout would further boost the taxable estate.

Make sure your Will reflects your current circumstances and wishes

All too often people do not consider their Will when an important life event has happened – such as a new addition to the family, or on divorce.  To ensure that your estate is left to the people you wish to benefit, we strongly recommend your Will is re-considered each time a life event occurs.

Consider a Bypass Trust for your pension fund

Whilst your accumulating pension fund may not be taxable on your death, if it is paid directly to your spouse or civil partner, this will inflate the value of their taxable estate, so the pension fund will eventually become liable to inheritance tax on the second death. By asking your pension scheme trustees to make payment to a Bypass Trust rather than to your spouse or civil partner outright, you can be confident that your pension death benefits will remain accessible to your beneficiaries without forming part of their estates for inheritance tax purposes.

The Bypass Trust is discretionary, and the beneficiaries will include the surviving spouse/civil partner and children. So during the spouse’s/civil partner’s lifetime he or she can potentially benefit from income and capital distributions (and possibly even from a loan of the Trust property which may be an allowable deductible for inheritance tax on the beneficiary’s death). The assets in the Trust will not, however, form part of the spouse’s/civil partner’s estate and will not therefore be taxed on his or her death. The Trust may simply continue for the benefit of the next generation (it should, of course be stressed that the Trust is flexible so that if the spouse/civil partner has need of all the Trust Fund it can be distributed to him or her provided that the trustees are in agreement).


We strongly recommend that you consider your Estate Plan and ask Fiducia to assist you by establishing appropriate measures to ensure your wealth is passed down to your family with the minimum of fuss and tax.


Past performance is not a reliable guide to the future. The value of investments and the income from them can go down as well as up. The value of tax reliefs depend upon individual circumstances and tax rules may change. The FCA does not regulate tax advice. This article is provided strictly for general consideration only and is based on our understanding of law and HM Revenue & Customs practice as at December 2012 and the contents of the 2012 Autumn Statement.  No action must be taken or refrained from based on its contents alone.  Accordingly no responsibility can be assumed for any loss occasioned in connection with the content hereof and any such action or inaction.  Professional advice is necessary for every case.

If you would like to know more about how we as Financial Advisers can help you with Inheritance Tax visit the Estate Planning section of our website: Estate Planning or send us email at: [email protected]

The information contained in our website is for guidance only and does not constitute advice which should be sought before taking any action. The information is based on our understanding of legislation, whether proposed or in force, and market practice at the time of writing. Levels, bases and reliefs from taxation may be subject to change. Accordingly, no responsibility can be assumed by Fiducia Wealth Management Limited, or any associated companies or persons, its officers or its employees, for any loss occurred in connection with the content hereof and any such action. Professional financial advice is recommended for every case.

Fiducia is a multi award-winning firm of Financial Advisers based in Dedham near Colchester situated in the heart of Constable Country on the Essex Suffolk border.

Fiducia Wealth Management Ltd. Dedham Hall Business Centre, Brook Street, Dedham, Colchester, Essex, CO7 6AD.

Fiducia Wealth Management Ltd. is authorised and regulated by the Financial Conduct Authority.. FCA No. 408210

Fiducia Wealth Management
Posted in Inheritance Tax on 12.12.12