Planning to reduce Inheritance Tax is an important part of your overall management of your financial affairs during your lifetime, to protect your hard earned wealth and provide for your family on your death. The ability to transfer any unused balance of the nil rate band between spouses and civil partners on death has improved the situation, but there still remains plenty of circumstances where planning in advance can substantially reduce the final liability.

This is particularly important for property owners, considering that the Government has announced a five year freeze on the nil rate band at £325,000 until April 2015. A return to modest growth rates of say, 5% on average over this period would reduce the value of the nil rate band to just £254,000 in today’s terms, thereby exposing a considerably greater proportion of properties to this “grave-robber’s tax”

In addition to offering advice in this particular area, we carefully review a client's financial position to protect assets. This may include community care implications and the impact of fast-growing capital assets.

December 2010

Pensions and Inheritance Tax

The new rules coming in this year, which are giving many people headaches, do at least have the advantage that you do not instigate an IHT charge on your pension fund by taking drawdown.  The previous charges which could total more than 80% have been completely replaced by a 55% charge on the funds at death.  The only way to keep your pension entirely out of HMRC’s hands is not to touch it and to die before the age of 75.  Rather a drastic tax planning exercise!!
At least by having the funds in your pension, your family can get 45% of this rather than donating the balance to the insurance company. 

September 2011

Nil Rate Band

With the freezing of the IHT Nil Rate Band IHT planning has never been more important.

A Nil Rate Band Will Trust is definitely 'back in' and now is the time to think about any lifetime gifting you can manage as asset values are historically low and you are able to give a full Nil Rate Band of £325k away every seven years, thus maximising what you can transfer to the next generation free of IHT, and ensuring that the growth in any assets is outside your estate.

This also makes it a very good time to look at doing a Discretionary Gift Trust.