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Estate Planning and Inheritance Tax Advice in the UK

Estate planning and inheritance tax planning go hand in hand in the UK. These two concepts are closely related and also quite complex. We recommend you discuss your estate and inheritance tax planning with a qualified inheritance tax specialist.

Estate planning in the UK is not only about planning whom your inheritance goes to, but also about enjoying your life now and having enough money to live on.

On the other hand, if you don’t plan your estate properly, your heirs could have to pay more than the value of the estate in inheritance taxes, and they may even have to get a bank loan to do so.

Avoid this by enlisting the help of inheritance tax specialists. The fee that goes towards them could be a fraction of what you could save in inheritance taxes, with the right advice.

Benefits of Inheritance Tax Advice

The peace of mind that your property will be put to use exactly as you want is priceless. Proper inheritance tax planning can help you –

  • Ensure you don’t pay more in taxes
  • Quantify how much you need to live well
  • Estimate how to allocate your property to reduce tax
  • Ensure your heirs and beneficiaries don’t have to pay much in inheritance taxes
  • Ensure that the heirs get enough to use from your inheritance

Planning inheritance tax is a part of estate planning. Correct planning can make all the difference. Usually, inheritance tax is 40% of the inheritance above the nil band.

The nil band is currently set at £325,000, which means that any amount of assets inherited above this amount will attract an inheritance tax bill. You can minimize this amount further with expert inheritance tax advice in the UK.

The UK government allows you to increase the nil band by including the ‘residence nil band.’ The limit for residence nil band is set at £175,000. This means that your nil band could amount to £500,000.

How to Avoid Inheritance Tax in the UK

Avoiding inheritance tax in the UK is easy with the right inheritance tax planning specialists. We recommend planning your estate as soon as possible to ensure maximum benefit to your heirs, and a reduced inheritance tax bill.

There are numerous ways to reduce or eliminate inheritance tax bills –

  • Plan gifts annually
  • Use alternate assets for a retirement income and pass on your pension
  • Get a life insurance policy to cover the inheritance tax
  • Make tax-efficient investments to benefit from business relief
  • Use trusts
  • Leave some money to a UK recognised charity
  • Leave the estate to your spouse or civil partner
  • Use property allowances
  • Consider equity release

You could use a combination of these methods to reduce your inheritance tax. However, you need to evaluate each aspect very carefully to avoid paying more. Inheritance tax specialists can help you get the maximum benefit out of your hard-earned property.

Estate and Inheritance Tax Planning

Your assets, debts, and liabilities are all evaluated together during estate planning. It is on this valuation that your inheritance tax is calculated. Now you see the link between the two.

If you plan your estate correctly and start distributing your estate effectively before your death, you can reduce the tax as well.

Ensure that reducing your estate is as beneficial as passing it on after your death. For example – If you want to pass your estate to your children after death, you can do so earlier by gifting them an annual allowance of a total of £3,000. You can split this amount amongst as many people as you like.

Instruments of Estate Planning

There are two legal instruments of estate planning that are used – Wills and Trusts.

Understanding these instruments and their features can help you make informed decisions about estate planning.

What is a Will?

A will is a legal document that states your assets, debts, liabilities, and beneficiaries. It contains the wishes of the deceased regarding the distribution of their estate.

What is a Trust?

Trust is a legal entity that protects the individual’s assets and distribute them according to their wishes. Trusts can come into effect before and after the individual’s death.

We recommend a combination of wills and trusts for estate planning. Always update these instruments, especially after you add an asset to your wealth.

The Bottom Line

Inheritance tax planning is not easy, and it only gets more complicated as your wealth grows. There are many laws in the UK that could be to your advantage and help you keep a bigger portion of your estate.

Estate planning could help your heirs could get a bigger part of your estate after your death. You could distribute your wealth exactly as you want. Avoid potential bad blood and animosity amongst those you leave behind.

Our inheritance tax specialists are more than happy to help you with our expert advice. We are just a phone call away from you. Call us at 0207 183 0136

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