- Make a Will – very important, so that your assets are inherited how you would choose, not via the intestacy rules. It’s especially important if you are a business owner, so that the shares/business assets are inherited by the correct person for the business, whilst the family can benefit from a cash equivalent.
- Consider structuring your Will to ensure maximum tax efficiency.
- Use the annual exemptions every year:
- £3,000 per individual per annum. If not used in any one year, this can be carried forward for one year only.
- £250 to any number of people on an annual basis.
- £5,000 to your children on marriage.
- £2,500 to your grandchildren on marriage.
- Ensure any business assets or shares in your own company qualify for business property relief, an inheritance tax “IHT” exemption for business assets.
- Similarly, ensure any farming assets, land and property qualify for agricultural property relief, an IHT exemption for agricultural property.
- Consider making lifetime gifts, known as potentially exempt transfers (PETS). After seven years, these gifts fall out of the estate and, after three years, the IHT on the gift starts to taper.
- If you do not spend all of your income, start to make regular gifts out of the excess income. These gifts are immediately exempt from IHT.
- Make gifts of cash or assets with a market value of up to £325,000, or £650,000 for a couple, into trust. After seven years, these gifts fall out of the estate and a further gift of up to the same amount can be made every seven years.
- Consider life insurance to cover any IHT due. This could give you time to consider making gifts or doing some tax planning.
- Consider other tax planning such as a family investment company to reduce the value of your estate.
All of the above require detailed advice to ensure things are done correctly. If you need help, please get in touch with our Private Client team on 0333 123 7171.
