Inheritance Tax Planning

Inheritance Tax planning encompasses the proactive preparation for the orderly transfer of an individual’s assets to their chosen beneficiaries upon their passing. The primary goal of inheritance planning is to facilitate a smooth and efficient transfer while maximizing the value of the estate and minimizing tax obligations.

This planning process involves the strategic utilization of various legal strategies and approaches. These include the creation of wills to outline asset distribution, the establishment of trusts to protect and manage assets, the designation of beneficiaries for retirement accounts and life insurance policies, the implementation of joint ownership and titling of assets, and the granting of powers of attorney for decision-making.

It is advised to seek expert advice on inheritance planning to navigate its complexities effectively.

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What are the various methods for distributing assets through inheritance tax planning?

Inheritance tax planning offers multiple avenues for asset distribution, such as drafting a will, establishing trusts, and designating beneficiaries for retirement accounts and life insurance policies. The optimal approach depends on individual circumstances.

When should an individual initiate inheritance tax planning?

Commencing inheritance tax planning is beneficial at any stage. Ideally, it should begin when a person starts accumulating assets and wealth. Nonetheless, it is never too late to create an inheritance plan, and it is important to review and update it as circumstances evolve periodically.

Do I need a lawyer to help with inheritance tax planning?

While it is possible to create a basic inheritance plan without a lawyer, seeking guidance from a knowledgeable estate planning attorney is recommended. Consulting with experts, like Lanop Accountants and Tax Advisors, can ensure the plan’s legal validity, minimize taxes and legal expenses, and provide expert advice on the most effective asset distribution strategies.

When do you pay Inheritance Tax?

If the total value of what you leave behind when you pass away is more than £325,000, an Inheritance Tax may apply.

Add up the value of everything you own, subtract the nil-rate band, £325,000 (unless extra allowances apply), and what remains could be taxed at a rate of up to 40%. This payment comes from your total assets.

If your partner passes away before you and doesn’t use up all their £325,000 allowance, the unused portion can be used when you pass away.

How to Manage an Inheritance Tax Bill?

Planning your estate can significantly reduce your tax burden. Typically, Inheritance Tax is set at 40% on amounts exceeding your nil rate band. Acting ahead of time ensures that a larger portion of your money reaches your beneficiaries. There are numerous strategies to handle, decrease, or even remove an inheritance tax bill, such as:

Making gifts.
Utilizing different assets to create a retirement income and transferring your pension.
The use of tax-efficient investments to benefit from Business Relief.
Obtaining a life insurance policy to cover the tax expense.

Start Planning Early If your goal is to leave behind as much of your wealth as possible, it’s a smart choice to plan in advance for Inheritance Tax. Beginning to explore your options sooner rather than later is a great approach. With a well-thought-out plan, you can safeguard your assets from IHT and decrease the potential tax load on your family. For more information or if you have any inquiries about Inheritance Tax planning, don’t hesitate to reach out to us. Lanop Business and Tax Advisors can ensure the legal validity of the plan, reduce tax burdens and legal expenses, and provide invaluable advice on the most optimal strategies for asset distribution.

The client had nine BTL properties of which only one was jointly owned with his wife. He had been declaring all his rental income throughout these years. Upon contacting Lanop, he was informed that he had been declaring full rental income even for his jointly owned property. In practice, the jointly owned property had to be declared by his wife as her share of rental income separately and the disclosure needed to be made through Let Property Campaign.

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Meet Our Experts

Our team consists of skilled and experienced accountants and financial advisors. These professionals are able to assist individuals, entrepreneurs, business partners, and larger ventures with their financial and accountancy acumen.

Aurangzaib Chawla

Tax Partner

Jonathan Amponsah

Wills & Probates Specialist

Dr. Zubair Abbasi

Islamic Law & Shariah Specialist

Meet Our Experts

Aurangzaib Chawla

Tax Partner

Muhammad Sohaib

Financial Accountant

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How to pay your inheritance tax in instalments?

June 23, 2023 Estate Planning & Wills | Tax Planning

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Inheritance Tax Planning