Inheritance Tax Planning

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Inheritance Tax Planning is not regulated by the Financial Conduct Authority.

Inheritance tax is applied to the estate of an individual when they die. It may also be charged on certain gifts and transfers made during the individual’s lifetime.

The main point is that gifts other than those covered by annual allowances, need to be out of the individual’s estate for seven years before they are free from inheritance tax.

Therefore, this means that planning is crucial.

On death

On death, the value of the deceased’s estate will be subject to IHT. The first
£325,000 is said to be within the nil-rate band and will be subject to an IHT
rate of 0%. The balance will be subject to the standard rate of 40%.

In the event of the death of a spouse or civil partner, their unused nil rate band
can be transferred to their surviving partner for use on their death. The amount
available will be the proportion of the unused nil rate band on the first death.

During life

Effective IHT planning takes place while the individual is still alive, through the
prudent use of a number of exemptions and allowances.

Pensions for IHT Planning

Personal pensions can be arranged to mitigate inheritance tax.