Fiducia Wealth Management

We recently collaborated with Goody Burrett LLP to present a free Q&A webinar about wills, inheritance tax (IHT), probate and trusts. It proved to be an area of property law and finance that causes some confusion and concern and, given the implications for family, it’s understandably one on which we are keen to advise. If you’d like to stay informed of future such events, then do please sign up to our mailing list.

Despite rumours of a shakeup in the March Budget, IHT was left untouched, possibly due to these unprecedented and uncomfortable times.

If you’re looking to pass on as much wealth as you can to your loved ones, planning now could help save them a lot of money.

This is a brief overview of the complex area of estate planning so if you are unsure how to proceed please ask for us for specialist advice. Tax rules can change, and any benefits depend on personal circumstances.

The basic rules

IHT is usually paid at 40% on the value of your estate (your property, money and possessions) over the £325,000 allowance (the normal nil rate band). There’s also an additional allowance of up to £175,000 if you pass on your family home to children or grandchildren.

If you’re married, you can combine your thresholds and transfer assets between each other free of IHT. When one dies, the surviving spouse won’t have any IHT liability and should be able to claim the IHT allowances which were unused by their late spouse.

Five ways to make gifts and save IHT

Estate planning can be a complicated process, especially as rules and legislation seem to change often. But, with the right forward planning it’s possible to significantly reduce or even eliminate an IHT liability.

You can reduce the taxable value of your estate by gifting. Gifts are typically made directly to the recipient but could also be made to trusts, ISAs and Junior ISAs, or pensions, as part of longer-term financial planning.

  1. Annual exemptions

In each tax year, you can make gifts of up to the annual exemption of £3,000. On top of this, any unused exemption from the previous tax year can also be used. This means up to £12,000 per couple can be gifted in this way (or £6,000 pa where no unused exemptions are available).

  1. Gifts from income

You can make regular gifts out of income completely IHT-free. These gifts must be from your post-tax income, made habitually and leave you with enough income to maintain your standard of living.

  1. Marriage gifts

Parents and grandparents can make one-off IHT-free gifts on the marriage of their children or grandchildren, of up to £5,000 and £2,500 respectively. If you aren’t a parent or grandparent, you can still gift up to £1,000 within this exemption.

  1. Small gifts

In each tax year you can gift up to £250 to any number of people completely free of IHT, as long as they haven’t received a gift which uses another exemption.

  1. Donations to charities or political parties

Gifts to these types of organisation, either during your lifetime or via your Will, are exempt from IHT. If you leave 10% or more of your estate to registered charities on death, the rate payable reduces to 36%.

Read more on Estate Planning & Inheritance Tax

Advice is often the right place to start

IHT rules are complicated and advice is usually valuable as not considering the tax implications can be very costly for your loved ones. If you are concerned about the potential impact of IHT or would like to find out more about the rules, why not contact us today.

There are many strategies we could help you implement, from reducing your IHT liability to helping you maintain more control over your gifts. The rules are complex, especially when considering trusts – our advice team can tell you more and help with your estate planning.

You can find out if we can help with one simple call to our team. A free, no obligation 1:1 meeting means that you know exactly what to expect should you decide to engage us.

Fiducia Wealth Management

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@fiduciawealth.co.uk

The information contained in website is for guidance only and does not constitute advice which should be sought before taking any action or inaction. 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 occasioned in connection with the content hereof and any such action or inaction. Professional financial advice is necessary for every case.

Fiducia are an award winning firm of Financial Advisers based in Dedham near Colchester situated in the heart of Constable Country on the Essex Suffolk border. www.fiduciawealth.co.uk

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