Inheritance Tax and Estate Planning

Peace of mind for you and your loved ones

Passing your wealth on to future generations

Even though individual circumstances are unique, everyone’s goal is to protect their assets and transfer their wealth with maximum efficiency to the next generation or their preferred cause.

At AFH Wealth Management, our independent financial advisers use a combination of proven and effective strategies to minimise the inheritance tax burden your beneficiaries need to pay. We can give you the peace of mind of knowing that you can provide certainty and financial security for your loved ones or your beneficiaries.

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Find out more about the impact of inheritance tax on your loved ones if you’re not prepared by downloading our guide to inheritance tax planning. 

What is inheritance tax and does it apply to me?

Inheritance tax (IHT) is calculated and payable on your estate upon death. This includes assets such as property, savings and investments – even works of art, jewellery and cars. Usually, if your estate is worth more than the £325,000 threshold set by the government, you will be eligible for IHT. However, if you pass your home (your main residence) on to a child or grandchild, then the threshold may be raised, depending on your circumstances, to £500,000 or even £1 million.

Why is it important to start planning inheritance tax early?

Whatever the size of your estate is, many of us will be liable to inheritance tax and without a plan in place, settling your affairs after you go could leave your loved ones or beneficiaries with a hefty bill and paperwork. By planning ahead, you can significantly mitigate your inheritance tax bill, but also ensure you have enough money to live on and enjoy life now.

Our expert financial advisers can help create a succession plan to pass on your assets most effectively, and work with you to reduce or manage your inheritance tax bill.

Reducing your inheritance tax bill

Inheritance tax is currently charged at 40% on all your estate over your nil-rate band allowance. Fortunately, there are many ways to manage, reduce or eliminate inheritance tax bill, including:

  • Residence nil-rate band

    The residence nil-rate band (RNRB) could potentially save your estate a lot of money in inheritance tax. The RNRB is an additional allowance for passing on the family home and at AFH Wealth Management, we can check if your estate qualifies for the residence nil-rate band and recommend further inheritance tax strategies to maximise your allowances. You can find more information on the RNRB and how it works in our residence nil-rate band article.

  • Trusts

    Using trusts can be very tax-efficient when passing on your wealth. Trusts come in different forms and can be used to protect your assets and minimise tax efficiently while allowing you to influence how they are managed and who will benefit from them. Life insurance can also be set up in a trust, so that the money can be accessed immediately to pay an inheritance tax bill.

    Our independent financial advisers can advise you on the benefits of trusts and help you decide which are the right fit for you based on your goals and objectives.

  • Making financial gifts to family and friends

    Making financial gifts is another way to reduce your inheritance tax, however, gifting is a complex area subject to a number of rules and allowances set by HMRC. So, it is essential to know which gifts are exempt, which will become exempt after a while, and which can result in an immediate inheritance tax charge. You can gift a variety of assets such as cash, savings, property or can even choose to set up a trust for long-term giving.

    Our financial experts can help you estimate your future finances and find the best strategy to maximise your annual gifting allowances.

  • Passing on a pension

    Pensions are often seen as a source of retirement income, but they can be a powerful tool in estate planning as they are usually exempt from inheritance tax and anyone can inherit them. So, if you minimise the usage of your pension, you can on pass more tax-free wealth while also reducing the size of your taxable estate.

    Contact our team of experts who can advise you on how to use your pension in succession planning while ensuring you are ready for a long and comfortable retirement.

  • Investing in BPR-qualifying companies

    Investments in assets qualifying for the business property relief (BRP) can alleviate inheritance tax on the succession of these assets at a rate of 50% or 100%. This can be very beneficial if you don’t want to give away large sums of money in your lifetime, or if you want the inheritance you leave to grow over time.

    Keep in mind there are a number of exception rules and investing in such companies can pose a higher risk, so it is always better to seek financial advice. At AFH, we can guide you through the options and help determine which, if any, are appropriate for you.

  • Writing a will

    A will is important as it not only ensures your estate is passed on according to your wishes, but it can also affect your estate and inheritance tax position. For example, did you know that anything you leave to charity in your will is free from inheritance tax?*

Don’t leave it until it is too late. Start your inheritance tax and estate planning now.

Our independent financial advisers can help you with every step of inheritance tax planning. Get in touch to book your free consultation and find out how we can help you.

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*Will writing is not regulated by the Financial Conduct Authority.