Inheritance tax planning

It’s important to remember that when you die, your estate could be subject to inheritance tax (IHT) if it’s worth more than the inheritance tax threshold.  With careful planning you can reduce the amount payable – but it can be complex. Our checklist will help you get started by highlighting the key areas to consider.

The inheritance tax threshold is £325,000 per person, so married couples and civil partners can have a joint estate of £650,000 before any IHT is payable (this threshold is likely to stay in force until April 2018, though an additional allowance covering family homes only will be phased in from April 2017, starting at £100,000 per person).  In most cases tax is currently payable at 40 per cent of everything over the IHT threshold.

There are various ways you can reduce the size of your taxable estate, such as with lifetime gifts, trusts, charitable giving and other forms of planning. It’s important to think a long way ahead, as some aspects of IHT planning need seven years to take full effect. A financial adviser can help you put suitable arrangements in place.

Some questions to ask your financial adviser:

•    How can I reduce tax payable on my investments?
•    Should I transfer my assets to someone else?
•    If my family can’t pay the IHT, what happens then?