Private Client, Wills, Probate & Estate Administration

Inheritance Tax Advice Specialists in Ormskirk & Lancashire

Effective Inheritance Tax planning can ensure that you and your family make the best use of all available allowances and could save your estate thousands of pounds.

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Michael Prendergast Michael Prendergast

Partner, Private Client Department

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    Table of Contents

    What is Inheritance Tax Planning?

    Inheritance Tax can seem complicated and time-consuming to fully understand. With the complexities surrounding Inheritance Tax legislation, including the Residential Nil Rate Band, it is important to speak with solicitors that understand this area fully.

    Our team at Dickinson Parker Hill is in a prime position to help you understand your options in relation to Inheritance Tax and how to maximise the available Inheritance Tax allowances.

    What are the benefits of good Estate Planning?

    Estate Planning is an important process to undertake and regularly review, as it ensures that your assets and prized possessions are passed on to your family in a safe and secure way while at the same time reducing the impact of the potential Inheritance Tax bill.

    There are several ways in which Inheritance Tax planning can work, specific to each individual.  Our legal team can take a look at your specific circumstances and advise you on your exact options in terms of Inheritance Tax planning and wider Estate planning.

    What allowances can be used in Inheritance Tax Planning?

    There are a number of allowances that can be utilised as part of a lifetime Inheritance Tax planning process. These include:

    • Small gifts allowance
    • Gifts in consideration of marriage
    • Potentially Exempt Transfers (PETs)
    • Lifetime Chargeable Transfers (LCT’s)
    • Gifts of surplus income
    • Use of the annual allowance for Inheritance Tax purposes

    It is also important to consider your Inheritance Tax allowance and how any lifetime gifts will impact it. There is now also a need to consider your residence in light of the Residential Nil Rate Band; this can also impact your will and how that is structured.

    For those considering larger gifts in excess of the Inheritance Tax allowance, you also need to consider the availability of taper relief and how this affects the overall value of the estate and the Inheritance position of your estate in the event of your death.

    What is the value of a Trust?

    A trust may also be a suitable vehicle, depending on your circumstances, for estate planning in an effort to mitigate Inheritance Tax. A trust can be especially useful if you are looking to preserve family wealth, protect vulnerable beneficiaries, or maximise tax allowances. Additionally, using a whole-of-life insurance policy is a viable option for providing for some or all of any Inheritance tax bill through a payout, also known as an IHT bill. 

    Are there other tax planning options on offer?

    Other tax planning options and considerations include using the exemptions relating to charities; those with business assets need to consider the availability of Business Property Relief (BPR) and those with agricultural property need to consider the availability of Agricultural Property Relief (APR).

    Ensuring sensible Inheritance Tax planning with clear objectives from the outset will help you put in place a strong financial foundation for your family in the event of your death. Our team is here to help you maximise the benefits of that foundation.

    Our Inheritance Tax Planning services

    At Dickinson Parker Hill, we understand that Inheritance Tax planning can seem complex and confusing to many individuals and families. That said, making sure it is undertaken can have a range of financial benefits for your family.

    We are able to offer a range of expertise and experience to handle all of the stages of the Inheritance Tax planning process for our clients in Ormskirk, Southport, Liverpool, and around the North West. We have advised many clients on their Inheritance Tax planning and offer a bespoke estate planning service. This will often involve making use of lifetime allowances, using trusts, and ensuring your will is as tax-effective as possible.

    How can I move forward with Inheritance Tax Planning?

    For more information about Inheritance Tax and how our expert legal services can help you with thorough Inheritance Tax planning that makes a real and lasting positive impact on your family’s future, please feel free to contact our team today.

    On our contact page, you’ll find an easy-to-fill contact form, allowing us to call back at a convenient date and time. Alternatively, you can speak to us right away by emailing or by calling 01695 574201.

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    Frequently Asked Questions

    How Does Inheritance Tax In The UK Work?

    Inheritance Tax planning involves preparing in advance to minimise the tax liability on your estate that will be passed on to your beneficiaries after your death. Here are some steps to go about inheritance tax planning:

    1. Understand the inheritance tax laws: Familiarise yourself with the current inheritance tax laws and exemptions in your country or state.
    2. Evaluate your assets: Take stock of all your assets, including property, investments, savings, and valuables.
    3. Consider gifting: Gifting assets during your lifetime can help reduce the value of your estate, which is subject to inheritance tax.
    4. Make a will: Having a clear and updated will can ensure that your assets are distributed according to your wishes and may help minimise inheritance tax.
    5. Explore trusts: Setting up trusts can be a useful tool for managing and distributing assets while potentially reducing the inheritance tax burden.
    6. Seek professional advice: Consulting with a solicitor, such as Dickinson Parker Hill, can provide you with personalised guidance on inheritance tax planning strategies tailored to your specific situation.

    How Does Inheritance Tax In The UK Work?

    In the UK, inheritance tax is a tax that is levied on the estate of a deceased person. The tax is calculated based on the total value of the estate, including property, money, possessions, and investments. If the estate’s value is below the government-set inheritance tax threshold known as the “nil-rate band,” there is typically no inheritance tax to pay. As of the current tax year, this threshold is £325,000, and an additional “residence nil-rate band” of £175,000 can be added if the main residence is left to a direct descendant. This means that an estate could be worth up to £500,000 before any inheritance tax is payable. However, any amount above this threshold, including the value of your main residence or permanent home, will be subject to the standard Inheritance Tax rate of 40%, making it important to plan and consider the potential impact of inheritance tax on the part of your estate that may be subject to this tax for IHT purposes.

    If the value of the estate exceeds this threshold, inheritance tax is charged at a rate of 40% on the amount above the threshold, known as the IHT threshold. However, there are certain exemptions and reliefs available that can reduce the amount of inheritance tax owed, such as gifts to charity or certain types of business assets. In fact, if you leave 10% or more of the ‘net value’ to charity in your will, the estate can pay Inheritance Tax at a reduced rate of 36% on some assets. Agricultural relief is another option for those with a farm or woodland in their estate, which can allow for a reduced or even eliminated tax bill for their heirs. Business relief is also available for certain types of business assets, allowing for a reduced or eliminated tax bill for heirs as long as there is enough income left to fund the normal lifestyle of the individual. It is important to seek legal advice when considering these options to ensure all rules and regulations are followed properly.

    It’s important to keep in mind that inheritance tax laws and thresholds may change over time, so it’s advisable to seek advice from a professional advisor or consult official government sources for up-to-date information on how inheritance tax works in the UK.

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