Inheritance Tax

How We Can Help

At Fiona Frankland Legal Services, we understand when you have worked hard all of your life and accumulated assets and property, the last thing you want for your family is to face on your death a massive inheritance tax bill, which can cause huge problems and cause extra stress at a difficult time.

The parameters surrounding Inheritance tax relief are constantly changing and it can sometimes be difficult to keep track of what that means to you and your assets, but our team can advise you on the best strategies tailored to you for the size of your estate.

What Is Inheritance Tax?

Inheritance tax is a tax on the ‘estate’ of someone who’s passed away. The death estate will be valued, and your beneficiaries could end up paying 40% to the government for Inheritance tax. You should consider Inheritance tax advice to avoid paying too much. Giving gifts while you’re living can significantly reduce the amount of Inheritance tax payable on death. Our team can advise on the different ways to reduce the amount of Inheritance tax due on death.

Levels Of Tax

  • No Inheritance tax is due on the first £325,000 of the estate, this escapes taxation and is called the ‘nil rate band’. The executor or administrator of the estate must report the estate value to HM revenue and Customs and pay the Inheritance tax before the estate is distributed. Your estate will be taxed at 40% on anything above £325,000 threshold when you die. 36% if you leave at least 10% of the net value to a charity in your will.
  • Everything in your will that passes to a spouse or civil partner on the first death is exempt from tax, so on the second death, the executors can use the combined inheritance tax threshold of £650,000.
  • If you are a widower and you remarry, you could potentially have three allowances.
  • The Residence Nil rate band is £175,000 for 2020/2021 for those who have direct descendants (child, grandchildren or adopted child). This will be added onto £325,000. However, this is only if your estate is worth less than 2 million.

Estate Planning

Estate planning protects your estate for future generations, to ensure wealth and assets remain in the bloodline. Also, to protect against a beneficiary divorcing or being subjected to bankruptcy.

Firstly, it is crucial you have made a will. You can then reduce your inheritance tax by making lifetime gifts, setting up trusts, taking out insurance policies, making investments and using the spouse exemption. The information given is based on current legislation, which can vary, which is why it’s important to have regular reviews.

Please call our office on 0115 939 3360 to book an appointment to make a will incorporating a life in Possession Trust or for advice with Tracy Morris our on-site Chartered Financial Adviser, with years of expereince for Inheritance Tax planning advice.