When to Consider Inheritance Tax Planning

Many people assume that inheritance taxes only affect the wealthy, but this is no longer the case. Soaring property prices in parts of the UK mean that many of us risk leaving our loved ones with hefty tax bills when we pass away. The good news is that it's possible to lessen its impact or even pay nothing at all in some cases, using inheritance tax planning.


What exactly is inheritance tax? In simplest terms, it refers to tax paid on the assets that are left by someone who has died. It is calculated after allowances and debts are deducted. Assets may include investments, cash in the bank, properties, vehicles, businesses, life insurance pay-outs, etc.

When you pass away, the government assesses how much your estate is worth and deducts any debts from the total to determine your taxable assets. Your estate, based on current laws, will have to pay a 40% tax on anything above the inheritance tax threshold of £325,000; or 36% if you give a minimum of 10% to charity. If you are passing your family home to lineal descendants (children or grandchildren) you may be able to claim another £175,000 allowance on top.

However, the values of many family homes now exceed the threshold value and this can force you into giving money to the state instead of to your heirs. Without any inheritance tax planning, your children may be forced to sell the home or other assets to pay the bill.

Inheritance tax planning can help you keep your hard-earned money in your family. By putting planning in place as early as possible, you can massively trim down your inheritance tax liabilities, and even eradicate it completely in some cases.

Talk to an estate planning consultant about the possibility of settling your assets into a trust and reducing your exposure to inheritance tax. There are different kinds of trusts, each with their own rules, benefits, and disadvantages. Sit down with an estate planning specialist to understand your options.


MVL Wills and Trusts of Battle, East Sussex, can help you put your Inheritance Tax Planning in place. A consultation is free and can be held at our offices or in the comfort of your own home. Call 01424 577070 or email info@mvlwillsandtrusts.co.uk for an appointment.