NORWICH FINANCIAL ADVICE

INHERITANCE TAX ADVICE and ESTATE PLANNING

 

NFA Home

 

NFA Invest

  Phone  01603 452686

 

 

 

Home

Investments

Protection

Contact NFA

       

       INHERITANCE TAX ADVICE   |   IHT   |   ESTATE PLANNING

   

 

 

 

'Inheritance Tax is a voluntary tax, paid by those who distrust their heirs more than they dislike the Inland Revenue!'

                         

  -  Lord Jenkins

 

'A tax loophole is something that benefits the other guy. If it benefits you, it is called a tax reform'.

                         

                               -  Russell B. Long  [ in: Contemporary Tax Practice ]

 

      

INHERITANCE TAX

 

On death, the government assesses how much your estate is worth; (and this includes cash you may have in the bank, any investments, property, businesses, or other assets that you own.

 

If the total value exceeds the Inheritance Tax threshold set by the Chancellor, tax will be payable on any excess at the rate of 40%.

 

From April 2012 this amount has been reduced to 36% if you leave at least 10% to a registered charity.

 

It is clear that talking about inheritance issues can be awkward (particularly if it involves yourself!) but ignoring this subject can easily become the most expensive mistake you will ever make in your financial life (and beyond).

 

The only mitigating factor in adopting the ‘head-in-the-sand’ approach is of course that you will not personally witness the transfer of often very large sums from your estate (and your beneficiaries) into the tax-mans coffers,        

 

 

 

CURRENT LIMITS – The NIL RATE BAND

 

Everyone is allowed to leave up to a certain amount before their estate becomes taxable. The amount is set by the government and is generally referred to as the Nil-Rate Band (NRB; i.e. the amount you pay a ‘nil-rate’ of Inheritance Tax on).

 

Currently (2014/2015 tax year) you are able to leave £325,000 completely tax-free to your heirs.

 

Above that amount, anything you leave behind is subject tax of 40% (36% if you leave at least 10% to a charity).

 

So for example, if you leave behind assets worth £500,000, your estate pays nothing on the first £325k, and 40% on the remaining £175k – a total of £70,000 in tax - if not leaving to charity.

 

Previously, the nil-rate threshold changed every year. However, in the 2010 budget, it was announced that the rate will be frozen for four years, effectively decreasing it in real terms (i.e. when inflation is factored in).

 

 

Transferable NIL RATE BAND

 

It is important to note that changes to the Inheritance Tax rules in 2007 led to the introduction of the so-called: transferable Nil Rate Band (NRB) for married couples and civil partners.

 

This means that when the first partner dies, any unused NRB can be transferred to the surviving partner. Married couples can therefore now have £650,000 of assets before IHT at 40% becomes a potential problem.

 

The transferable NRB rule has resulted in far fewer estates being liable for IHT, but the fact remains that if your assets, including your house, are worth more than the NRB, your estate is likely to be taxed when you die - unless you have taken assertive remedial action beforehand.

 

It's important to remember that IHT is never a problem for the person who has passed away: it's the beneficiaries whose inheritance will be hit by tax and who will have to sort out any complications.

 

Having said that, most people would prefer when they die that their wealth helped to boost the coffers of their family and close friends rather than HM Revenue & Customs. So what can be done to keep your assets beyond the taxman's reach?

 

As Benjamin Franklin so rightly said, the only things that are certain in life are death and taxes. So, whether you stand to inherit or leave the money, the first thing which is important is to face the facts and tackle these issues in a rational and grown-up manner.

 

On the following pages NFA provides you with selected tips which can be used to mitigate, or even remove, any future Inheritance Tax bills.

 

The described approaches do vary in a number of respects and the choice of the best way forward will often depend on the size of your total assets as well as other factors (age, health, family circumstances, attitude to risk, life style etc.) but for simplicity the various scenarios have been divided into three categories:

 

 

IF YOU HAVE ASSETS JUST EXCEEDING THE NIL RATE BAND (>£325,000) ►►►

 

WEALTHIER INDIVIDUALS (£400,000-£1,000,000) ►►►

 

HIGH/ULTRA HIGH NET WORTH INDIVIDUALS (£1,000,000+)  ►►►  

 

 

Follow the links above to get further details of the approaches most suited to each asset category.

 

As the IHT-field can be very complex and large sums of money often are at stake, it is important that you seek proper professional advice unless you are absolutely sure about what you are doing.

 

 

    Specialist Advice Areas


     Regulatory and Legal updates

    LONG TERM CARE -  

  BE PREPARED...

Long Term Care is an issue that most of us would rather not think about. But should you, or your loved ones, need it later it can be VERY expensive if you have not prepared.

      Read More...

WHAT WILL I GET

FROM THE STATE?

Although you may be entitled to a full or partial State Pension it is important that you also get to know what other benefits and support you may be entitled to in your later years.  Read More...►

WHAT ARE POWERS OF ATTORNEY?

Not very many people are aware of what Powers of Attorney really are or How

they Work? You need to know that they In many cases can be of critical importance in a difficult situation.  Read More...►

 

 PENSION CHANGES 2014

 
 

New rules allow increased flexibility for pension drawdown arrangements. But there are important aspects which need consideration.

   

   Read More...►

 

 PENSION CHANGES 2014

 
 

Is Income Drawdown a ticking time bomb?

Law changes and low Gilt yields can have a large impact on drawdown Portfolios.

   

  

 Read More...►

 

You are always Welcome

to contact NFA for a free discussion

of your Inheritance Tax Questions

 

Phone: 01603 452686

 

 

e-mail: info@norwichpensions.co.uk

 
     

 

 

 

 

 

Norwich Financial Advice  is a trading style of Dr Bjorn Drobak  who is an appointed representative

of Intrinsic Independent Ltd and Intrinsic Mortgage Planning Ltd, which are authorised and regulated by

the Financial Conduct Authority. Intrinsic Independent Ltd and Intrinsic Mortgage Planning Ltd are

entered on the FCA Register (http://www.fca.org.uk/register/) under reference 217742 & 440718

 

Decisions should not be taken based solely on the content of this website and individual advice should be sought first.

Regulations, levels and bases of taxation are subject to change.

No responsibility can be taken for any content available via external links from this websites.

The information on this website is aimed at UK residents or residents of MiFID countries