Tax and Estate Planning
With careful tax planning you can boost the value of your current or inherited estate. As tax law is complex and ever changing this will be an ongoing process rather than a one-off activity. Ongoing advice from Inspire Financial Planning can help you stay up to date with the latest rules, reliefs and allowances. We can also look to make sure you are not paying any more tax than you need to.
Good tax planning does not always involve complex schemes. The main objective is to ensure you have a good understanding of the taxes you pay, if they are eroding your capital or income and whether the impact of the taxes can be reduced.
Inspire Financial Planning will assess your financial circumstances, consider your life goals and help you create a strategy for improving your tax efficiency, so you can direct more of your money where you want it to go.
Inheritance Tax Planning
Throughout their lives most people pay Income Tax, National Insurance, VAT (Value Added Tax), Stamp Duty and some will pay CGT (Capital Gains Tax).
The final tax on death is Inheritance Tax, if your estate is above the inheritance tax threshold. Inspire Financial Planning can help reduce the amount payable on death, although it can be complex area of advice.
The inheritance tax threshold is £325,000 per person, which means married couples and civil partners can have a joint estate of £650,000 before any IHT is payable. There was a new ‘Main Residence Nil-Rate Band’ announced in the July 2015 budget that comes into effect in April 2017. It will initially be an extra £100,000 per person, rising by £25,000 per tax year to the maximum allowance of £175,000 per person in April 2020.
This additional Nil Rate Band will effectively provide married couples and civil partners with a combined allowance of £1 million to set against their estate value. There are some finer points to the new relief and how it can be used, which is why financial advice in this area of planning is invaluable.
It is possible to reduce the size of your taxable estate by making lifetime gifts, setting up trusts, making charitable donations and using careful financial planning. The planning options available to reduce the size of your taxable estate may include some of the following:
- Utilise your annual exemptions. The main exemption is £3,000 per person per annum.
Make gifts out of income. Excess income of any amount can be given away free for Inheritance Tax. There are rules to adhere to and it is important that accurate records are kept.
- Take out life cover under Trust to pay the Inheritance Tax liability. This option does not remove the liability, but it can provide the funds to your beneficiaries to pay the tax to HMRC.
- Utilise Business Property Relief. It is possible to invest into certain investments that are an exemption from Inheritance Tax after only 2 years. This kind of planning can have additional risks and Inspire Financial Planning can help take you through the options.
In most cases multiple planning options can be used to mitigate Inheritance Tax. If you are concerned about the level of inheritance tax due on your estate on death and you would like advice in this area, please do not hesitate to contact Inspire Financial Planning.
THE FINANCIAL CONDUCT AUTHORITY DOES NOT REGULATE TAXATION ADVICE.