Would you like HM Revenue & Customs to be the biggest single beneficiary of your estate when you die?
Sadly, without the right advice and careful financial planning, that is what could happen. Inheritance Tax (IHT) has an increasingly broad reach. The impact on a relatively modest estate can be quite dramatic, and on a large estate it could be ruinous.
The first £325,000 of an individual's estate is taxed at 0% and is therefore not liable to IHT. For married couples and registered civil partners it is currently £650,000, where the full allowance has been passed to the surviving spouse. Anything in excess of this amount is taxed at 40%.
There are a number of IHT planning steps you can take:
- Ensure your Will is written and planned correctly
- Transfer assets through the prudent use of lifetime gifts
- Create a tax-efficient fund to enable the beneficiaries of an estate to meet the tax liability without eroding the family wealth
Under IHT legislation, pensions can play a considerable role in estate planning:
- Death benefits under modern pension plans are broadly exempt from IHT although a liability to periodic and exit charges can arise in a limited number of circumstances
- Adequate retirement income with spouse or civil partner and dependents' pensions may release capital for lifetime gifting
Although pension death benefits are broadly exempt from IHT, if they are passed to your survivor they will form part of their estate. St. James's Place can offer solutions which allow your survivor access to your death benefits without this happening. We have a service, in conjunction with four leading law firms, which is designed to provide a wide range of differing legal services covering IHT, matrimonial issues and general tax planning.
The information on this website is based on our interpretation of the current law and HMRC practice. Taxation legislation and HMRC practice may be subject to unforeseen changes in the future. Wills and some areas of IHT planning are not regulated by the Financial Conduct Authority. The writing of a Will involves the referral to a service that is separate and distinct to those offered by St. James's Place.