Inheritance Tax

Inheritance tax (IHT) is currently paid at the rate of 40% on estates in excess of the nil rate band which currently sits a little in excess of £300,000. Estates given on death to a spouse or civil partner escape IHT, and any unused nil rate band can now be passed on to the spouse/civil partner. This means that couples with assets much above £600,000 may well need to plan for IHT mitigation on second death.

This is a complex matter that needs to take into account the couple’s need for capital and income during their lifetime, balanced with the wish to avoid IHT upon death. In general, the principal methods that could be employed are:

• Lifetime gifts, either directly to individuals or into a trust.
• Whole of life insurance written in trust, where benefits would be outside the estate.
• Investment in business assets, which can include certain shares on the AIM stockmarket.

Really effective IHT planning needs to be done in plenty of time, but it requires careful balancing of all the circumstances and objectives. Feel free to call us and we can elaborate on some of the possibilities.