Inheritance tax solicitors - tax planning

Inheritance tax could have an impact on your estate if the value of your assets less your debts is greater than the inheritance tax threshold (£325,000 this tax year).

Through careful planning you can ensure that maximum use is made of your inheritance tax 'allowance' available on death. An inheritance tax efficient Will is a good starting point and, in most people's cases, could be all that is needed.

To speak to a member of our probate team in relation to inheritance tax planning please call 0203 837 3658.

Areas of specialism

  • Inheritance tax planning through Wills
  • Inheritance tax planning through lifetime gifting
  • Creation and administration of trusts to pass on wealth
  • Inheritance Tax Planning

    Adam Sym talks about inheritance tax planning. Adam outlines the thresholds which need to be considered as well as highlighting how inheritance tax liability can be reduced.

    Adam also discusses Stephensons' approach to inheritance tax planning and how the process can differ from the drafting of more basic Wills.

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Inheritance tax calculator

This calculator will calculate the potential inheritance tax (IHT) liability on a person’s estate at death, based on the current tax rate, nil rate band and reliefs. In general, all your assets, including your home and any other property, as well as your savings and investment and any life policies you have not put into trust may be added to together.

Then, to the extent that the total exceeds the nil rate band of £325,000, it is subject to inheritance tax at 40%. Include all the amounts for your assets in the boxes provided, but do not include any assets that will pass to your spouse or civil partner – unless he or she is domiciled outside UK.

Then complete the details for any mortgages, loans or other liabilities you have outstanding. The calculator will tell you the total value of your net assets and your taxable estate, as well as your estimated IHT liability, on the assumption that you died this tax year.

For example, with a property worth £780,000, investments of £550,000 and no liabilities or business assets, the value of the net assets is £1,330,000 of which £1,005,000 is subject to IHT at 40%, making the tax liability £402,000.  

Assets (£)

Business assets
Property (inc. main residence)
Savings & investments
Life Policies (not in trust)
Other Assets

Liabilities (£)

Mortgage
Loans
Other Liabilites
Net Assets Value (£)
Amounts Subject to Inheritance Tax (£)
Estimated Tax Liability (£)

If you have made any gifts within the last seven years, you may be eligible to pay more inheritance tax.

If you would like further information about inheritance tax planning with our specialist solicitors please call us on 0203 837 3658 or complete our online enquiry form and we will contact you directly.

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Inheritance tax planning FAQs

I'm married, inheritance tax won't apply if I leave everything to my spouse will it?

Assets passing on death to a surviving spouse or civil partner are exempt from inheritance tax. If you left all your estate to your spouse you could be wasting your personal inheritance tax "allowance" though. A properly drafted Will can use a particular type of trust to prevent the surviving spouse from ending up with all the assets on the death of the first spouse. The trust can save inheritance tax on the second death while still benefiting the surviving spouse during his or her lifetime. This means more can be passed on to family members and other beneficiaries when both spouses have died.

Can I give my assets away during my lifetime to reduce my estate?

You can but to take the value of the gifts out of your estate for inheritance tax purposes you basically have to outlive the gift by seven years. You should not continue to benefit from the asset given away. Sometimes people give their homes to their children thinking that this takes that asset out of their estate for inheritance tax purposes. However, if they carry on living in the house until their death then the value of the home may still be added to their estate when calculating inheritance tax. The rules relating to lifetime gifts and inheritance tax can be complicated. You should always take legal advice on the inheritance tax implications.

How is inheritance tax actually paid?

Inheritance tax is due for payment six months after the end of the month of death. After this time interest starts to run on any unpaid inheritance tax. The grant can't generally be obtained until the inheritance tax has been paid. It may be that there are enough cash-type assets belonging to the person who has died (funds in banks for instance) to pay the inheritance tax before the grant is obtained to collect in the rest of the estate. Sometimes the personal representatives have to get a loan to pay the inheritance tax. Sometimes it can be paid by instalments on land and buildings although interest will be paid on these as well

Will everything I own be liable to inheritance tax?

Some assets such as certain business interests and property and agricultural property can get a reduction in inheritance tax. This depends on the type of assets and how long they have been owned by the person who has died. This type of reduction can be 100% or 50% depending on the type of asset. This inheritance tax "relief" can be very useful for inheritance tax planning.

What can I do to avoid inheritance tax?

There could be many options available to you. It depends largely on what you're worth, what type of assets you have, who you want to benefit from your estate and what you yourself will need during your lifetime. You may want to plan through lifetime giving or through your Will or a through combination of both. We can help you plan your estate to reduce the overall impact of inheritance tax on death.

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