Inheritance Tax Planning

What with increasing property prices, more and more people are finding that the value of their estate exceeds current Inheritance Tax (IHT) allowances, putting you at risk of HM Revenue & Customs becoming the biggest single beneficiary of your estate when you die. The impact on even a relatively modest estate can be quite dramatic, and potentially ruinous for larger estates.

Current Inheritance Tax rules

Currently, the first £325,000 (nil rate band) of an individual’s estate is taxed at 0% and therefore not liable to IHT for the 2023/2024 tax year. For married couples and registered civil partners, the total is £650,000, as the full allowance can be passed to the surviving spouse. Anything in excess of the total inheritance tax allowance is taxed at 40%.

The Residence Nil-Rate Band (RNRB) was introduced in 2017 for those leaving their main residence to their direct descendants. If the net value of the estate is £2 million or more after deducting any liabilities, but before reliefs and exemptions (such as Business Relief) then the RNRB will be tapered by £1 for every £2 above the threshold. Therefore, if you pass on your home to your children or grandchildren, your threshold will increase to £500,000.

Mitigating Inheritance Tax

At McMillan Wealth Consultants, we can advise you on some of the options available to help mitigate Inheritance Tax on your estate and ensure your family are still able to access your death benefits. Some of these options include:

  • A well planned and written will*
  • Transferring assets through a practical use of lifetime gifts
  • Creating tax-efficient funds to enable the beneficiaries of your estate to meet the tax liability without disrupting family wealth.

Although pension death benefits are broadly exempt from IHT, they will form part of their estate if passed on to your beneficiary. We can advise on solutions which allow your survivor access to your death benefits without forming part of their estate.

We also work in conjunction with a range of leading law firms to provide a service which is designed to allow you to access legal services covering Inheritance Tax, matrimonial issues and general tax planning. Get in touch with us to discuss your options or personal situation.

The value of an investment with St. James’s Place will be directly linked to the performance of the funds selected any may fall as well as rise. You may get back less than the amount invested.

The levels and bases of taxation and reliefs from taxation, can change at any time. The value of any tax relief depends on individual circumstances.

*Will writing involves the referral to a service that is separate and distinct to those offered by St. James’s Place and McMillan Wealth Consultants Limited. Wills are not regulated by the Financial Conduct Authority.

Interested in finding out more?

Call 01273 390561 to speak to an adviser

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