Inheritance tax can seriously decay your wealth

Whilst most individuals are busy managing their day-to-day affairs, often long-term succession planning is not considered, and individuals and families may be exposed to a substantial UK Inheritance Tax (IHT) liability.  

IHT regime is complicated and emotionally difficult to think about. It’s a tax on your estate after death and potentially on some lifetime transfers, currently at a rate of 40%. IHT is commonly described as a ‘voluntary tax’ and with good reason, as IHT liabilities can usually be reduced with proper, timely and often simple planning. 

IHT planning may take various forms, some common strategies, detailed below, include lifetime planning, using Company, Partnership or Trust structures, Will planning or even post death planning. 

Lifetime Planning 

Lifetime planning can significantly reduce your exposure to IHT whilst preserving the family assets for the next generation, this can be achieved by asset/equity reduction or converting assets which do not qualify for IHT reliefs, into assets that will qualify for these valuable reliefs. 

Family Investment Company (FIC) 

A FIC is a bespoke private company whose shareholders are family members. A FIC enables parents to retain control over assets whilst accumulating wealth in a tax efficient manner and facilitating future succession planning. 

Family Trusts  

Trusts offer a valuable structure in the context of preserving family assets whether it’s from third party claims, divorce, bankruptcy, spendthrift spouses, and youthful extravagance. Trusts can be one of the most efficient ways to protect personal assets. However, it is important that the correct type of trust is used and is properly constituted.  

Family Investment Partnerships (FIPs) 

FIPs can be an excellent structure for landlords, not only for IHT planning but income tax planning as well. As with Trusts, it is important to ensure that the correct type of partnership is used and a bespoke partnership agreements is implemented.  

Deathbed Planning 

As the name suggests, it is planning near the end of one’s life, whilst this is a distressing time for the family, this can be a very effective time to mitigate IHT whilst uplifting the market value of the asset to current values. 

Post Death Planning – Reactive Planning 

Even after death there is a relatively short window of opportunity to reorganise the testator’s affairs by variation or disclaimer which may mitigate the UK IHT payable (or if paid may result in a reclaim), this is a very valuable statutory relief which is too often missed. 

Timely tax advice is essential to mitigate IHT  

Our team of highly experienced tax specialists have extensive knowledge and experience in advising on sensible IHT strategies, which are not too complex, don’t fall foul of anti-avoidance provisions and can stand the test of time, as much as possible. 

In addition to planning for business and investments assets, the family home is invariably the most valuable family asset. We understand the sensitivities around IHT planning, that’s why we offer bespoke solutions, to mitigate IHT whilst preserving the family wealth for the next generation, taking into account your personal circumstances and your commercial objectives.  

Book a free tax consultation with one of our tax experts to see how we can assist you.  

Tax savings? Let’s talk!