Inheritance Tax Planning – A wealth of experience at your disposal

Wellden Turnbull provide a wide range of specialist advice and services on all tax exemptions and limits relating to inheritance tax planning. We have the expertise in place to ensure we fulfill your needs, however complex or specific.

When it comes to tax planning, inheritance tax can prove costly for many families. We also know that smart financial planning and knowing which investment opportunities are available can keep tax obligations associated with inheritance to a minimum. In some instances we will have helped beneficiaries avoid inheritance tax liabilities altogether.

There are many factors that affect inheritance tax obligations, such as the size of your estate, available income and the nature of assets held, so receiving advice that is specific to your circumstances is important.

Trusts are also a great way of managing assets and there are many types of trusts to choose from.

There are different types of trusts and they are taxed differently. It’s important to understand which one is right for you. To make sure you are making the most out of your wealth we will assess if trusts are an option, identify which assets apply and advise on suitable trust types. We will also advise on how to ‘will’ trusts and the effects of trusts on inheritance and Capital Gains tax.

We can also help by:

  • Setting up a trust – including liaising with legal advisors
  • Providing a trust tax compliance service – including HMRC correspondence and returns
  • Advising trust transfers – drafting hold-over relief documents etc.
  • Developing tax strategies – using trusts as asset protection structures
  • Advising on private investments and pensions accounting – including the suitability of conduit trusts
  • Supporting vulnerable beneficiaries – in all their trust dealings.

Trusts can be beneficial if you are a business owner too. This is particularly true if you are looking to pass on your business to your children or employees as part of your long-term tax plan. We will consider trusts in your tax planning for company shares and business assets. Furthermore we will provide advice on how trusts can enable employees to get involved in company ownership schemes.

Inheritance Tax Specialists

Call our inheritance tax specialists in London or in our Surrey office today. Book your free no obligation meeting on 01932 868444 or 0207 381 2022  Contact us.

Inheritance Tax FAQs

What is inheritance tax?

Inheritance tax (IHT) is a tax on the value of your estate (which includes any money, possessions and property) when you die.

What inheritance is taxed? (What gets taxed?)

Your estate is liable for the tax due when you die, this is deducted from your assets before anything is distributed to any beneficiaries.
There are a few types of gifts and assets that are exempt from inheritance tax, such as wedding gifts, certain business and agricultural assets, and assets that are gifted 7 years before your death. These assets and gifts do need to meet certain criteria before they become exempt. There is also a further £3,000 annual gift allowance that is not subject to inheritance tax.

What is the current inheritance tax threshold

The 2017/18 threshold for inheritance tax is £325,000.

What is the inheritance tax rate?

The current inheritance tax rate is 40%, though certain estates can qualify for a special 36% rate where the levels of charitable donations meet certain thresholds (2017/18).

How is inheritance tax calculated?

If your estate is worth £500,000 inheritance tax will currently be charged on £175,000 (£500,000 – £325,000). At the current tax rate of 40%, this means the inheritance tax payable would be £70,000 (40% of £175,000).

What are the nil rate band (NRB) and the residence nil rate band (RNRB)?

The nil rate band (NRB) refers to the inheritance tax threshold. The recently introduced residence nil rate band (RNRB), also known as the home allowance, reduce the value of the estate which is liable to inheritance tax. Unused reliefs will be transferred to a surviving spouse in most circumstances.

What is the home allowance and who qualifies?

A £100,000 relief introduced in 2017/18 applies to most estates where the deceased’s residence is passed to lineal descendants (e.g. children or grandchildren). The relief is being introduced gradually, and is intended to rise to £175,000 in 2020/21. This relief is in addition to the nil rate band and is tapered where the net value of the estate exceeds £2m.

Who pays inheritance tax?

Funds from your estate are used to pay inheritance tax. This is done by the person dealing with your estate, normally the executor of your will. Your inheritance tax bill will need to be paid before your beneficiaries receive the remainder of your estate.

Who pays inheritance tax when there is no will?

If you don’t have a will, it’s the administrator of the estate who does this.

When does inheritance tax have to be paid?

Inheritance tax must be paid within approximately six months from the date of your death. Non-payment will result in interest being charged by HM Revenue and Customs. Some assets can qualify for instalment payments of inheritance tax provided the asset itself is not sold.

Who gets inheritance money in a divorce?

For divorce settlements in England and Wales all assets of the marriage are generally pooled to be treated as joint assets, including past inheritances. Although, each case depends on individual facts and circumstances. The size of the inheritance, when it was received, how it has been used, and the needs of any children at the time of the divorce will all be considered.

Do I pay inheritance tax when my spouse dies?

No, in most circumstances you can leave your entire estate to your spouse or civil partner without any inheritance tax falling due. There are exceptions where the surviving spouse is not domiciled in the UK.

What are the rules of inheritance when my spouse dies?

Spousal inheritance rights are based upon two factors – whether or not there is a valid will, and whether or not the deceased spouse has any children. A will is automatically revoked when you marry, unless it was made in contemplation of that marriage. A spouse is entitled to a ‘legal right share’ of a deceased spouse’s estate even if there is no will.

Spouses and civil partners have the same legal right to inheritance and the same legal right to intestacy. Intestacy are the legal rules for the distribution of an estate where there is no will.

How can I reduce inheritance tax?

Reducing inheritance tax involves reorganising your affairs and can be complicated, best done under the guidance of an appropriately qualified professional with experience and knowledge of your individual circumstances and financial affairs. There will be a number of options available, including donating part of your estate to charity, and distributing your assets within your lifetime.

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