How to reduce your
estate's tax bill

Inheritance Tax (IHT)

With careful preparation and planning, you can make sure that your estate doesn’t pay any more inheritance tax than it needs to.

Inheritance tax (IHT) often evokes strong feelings in people. Many argue that it is unfair to pay taxes throughout their working lives only to pay tax again when they die. Whether or not that’s a view you share, estate planning is an issue you cannot afford to ignore. IHT is a 40% tax imposed on the worldwide estate of anyone who is UK-domiciled on all assets above £325,000.

IHT has been dubbed a voluntary tax, but there are numerous ways to reduce your liability

Official figures show that people with the biggest estates of more than £1m on death tend to have a larger exposure to liquid securities such as shares and cash, than to property. This is perhaps surprising as assets such as shares have multiple financial planning opportunities because, unlike property, they can usually be gifted or sold in small parcels. In short, the official HMRC figures appear to show that, by hanging onto liquid assets, many people are paying more IHT than they need to.

What can be done?

Preparation and cash flow planning are key to a robust IHT-mitigation plan. It is a case of working out what your own needs are and setting aside a core wealth pot to cover them. Then you can create a plan to generate the level of income required to maintain your lifestyle and this does not necessarily depend on keeping the underlying capital. Once you have done the maths, you will have a clear idea of how generous you can be with your capital and that generosity can then flow through to a reduction in your IHT estate.

Have I missed the boat?

The good news is that, even if you have not given IHT any thought to date, all is not lost. IHT has been dubbed a voluntary tax for good reason; there are numerous ways in which you can reduce or avoid an IHT liability and it pays to understand the IHT rules that allow you to make certain gifts without being caught in the IHT trap.

How Weatherbys can help

If you don’t want to spend time creating and constantly updating your financial plans, then let us take care of everything for you. We can work out what you need at every stage of your life. We will help you structure your portfolio to allow for unpredictable market fluctuations. In addition, we will make sure investments maximise your use of tax-efficient structures.


Important information

Tax laws are subject to change and taxation will vary depending on individual circumstances. The value of an investment and its income can both increase and decrease and you may not get back the full amount originally invested.


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