Inheritance Tax Planning and Efficiency

Depending on your circumstances, the assets that make up your estate and the beneficiaries that benefit from it, you may have opportunities to mitigate Inheritance Tax to a greater degree than is, at first, apparent.

It is important that you understand the opportunities and the methods used to benefit from them and so such opportunities will require specialist advice and careful thought. The financial benefits that can arise from such planning should outweigh the additional complexity and cost involved.

The estate of married couples may benefit from a joint nil-rate band and where one of you has previously been widowed, the estate may even benefit from three or even four, nil-rate bands provided your Wills properly provide for this in a particular way.

Life insurances, Death in Service benefits and pension death benefits all need particular consideration and with careful planning and advice can, when appropriate, be structured to keep any Inheritance Tax to a minimum.

Business owners can benefit from a generous relief from Inheritance Tax, known as Business Property Relief. However, to ensure the relief is maximised and not diluted, this needs to be clearly identified and protected in your Wills.

Farmers can benefit from a similar relief known as Agricultural Property Relief which will often work in conjunction with Business Property Relief.

Inheritance Tax payable can be reduced by gifting to Charities and where 10% of your estate is gifted, a lower rate of 36% can be payable on the remainder. However, the mechanism to ensure the lower rate is available is complex and specialist advice is required for you to understand how it works and the effect on the non-charitable beneficiaries.

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