Spotlight on: inheritance tax

No two families are the same and conversations around wealth transfer are often emotionally complex. Therefore a strong succession and Inheritance Tax plan is necessary to help navigate family dynamics and lay the foundations for generations to come.

Download our latest in-depth report to discover 10 ways to reduce your inheritance tax bill.

Inheritance Tax Report

People with the biggest estates of more than £1m on death may be paying more inheritance tax (IHT) than they need. Some assets, real estate for example, are illiquid and hard to pass on during a lifetime. However, official HMRC figures show that large estates in fact have a greater exposure to liquid securities such as shares and cash, than they do to property. Effective planning is possible, but larger estates seem to be missing the available opportunities.

IHT is a 40% tax imposed on the worldwide estate of anyone who is UK-domiciled on all assets above £325,000. HMRC collected £5.2bn of IHT tax receipts in 2019-20 with more than 75% of the total amount being paid by people with estates worth more than £1m.

Many people in this wealth bracket are voluntarily paying more tax than they need, because unlike property, assets such as shares can usually be gifted or sold in small parcels. Figures from HMRC show that securities such as shares account for the largest asset class in estates on death above the £1m mark – even more than property.

Wealthy individuals are paying more inheritance tax (IHT) than they need

Our latest report highlights 10 ways to reduce your IHT liability by planning ahead and calculating how much you will need to maintain your lifestyle in retirement.

Mitigation plans include making gifts, charitable giving, setting up trusts and business property relief.

Important information

The information contained in this article does not constitute financial advice or a personal recommendation. The value of an investment and its income can both increase and decrease and you may not get back the full amount originally invested. Tax laws are subject to change and taxation will vary depending on individual circumstances.