Top 10 Inheritance Tax (IHT) Tips

Your estate will be subject to a tax known as inheritance tax (IHT) when you pass away. All of your assets and property after debts and expenses paid to refer to as your “estate.”. Although death and taxes are certainties, your loved ones may keep more of your money with careful Inheritance Tax planning.

You may minimize your estate’s prospective tax burden in various ways, but doing so will need careful preparation, typically over an extended time frame.

Planning to minimize the Inheritance Tax your loved ones would owe after your passing is a noble and responsible act; after all, no one likes to pay more taxes than they have to.

We can help you minimize your Inheritance Tax liability in several ways, including advising you on how to minimize your estate by making donations and helping you take advantage of any applicable reliefs and exclusions.

Here are the top 10 tips on Inheritance tax:

Set up a trust for your Estate:

Establishing a trust can mean that money is beyond the estate if you live for seven years after setting it up; however, the associated taxes and laws are complicated, so you should get expert advice.

Invest in EIS / SEIS Companies:

Investing in smaller companies through the Enterprise Investment Scheme (EIS) or Seed Enterprise Investment Scheme (SEIS) offers various tax reliefs, as well as BPR which can pass on the investment IHT-free after two years.

Make a will:

Creating a will is the initial step to reduce your inheritance tax bill.

Utilise your pension allowance:

Pension funds are exempt from IHT for those under 75, so use your pension allowance to your advantage.

Invest in Business Property Relief (BPR) companies:

Investing in businesses that qualify for Business Property Relief can give you full IHT relief; you must be a shareholder for a minimum of two years, and still own the shares at death.

Invest in an AIM IHT ISA:

An AIM Inheritance Tax ISA is tax-free in your lifetime but can be subject to 40% IHT on your passing.

Invest in EIS / SEIS Companies:

Investing in smaller companies through the Enterprise Investment Scheme (EIS) or Seed Enterprise Investment Scheme (SEIS) offers various tax reliefs, as well as BPR which can pass on the investment IHT-free after two years.

Gifts to charity:

If you give at least 10% of your net estate to charity or certain organisations, you may receive a discount on the IHT rate.

Invest in commercial forestry:

Commercial forestry can also be exempt from IHT if it is held for two years, plus you get capital appreciation and tax-free income from harvesting the trees.

Utilise your gift allowances:

You can give away up to £3,000 tax-free every year, as well as £250 to multiple people and £5,000 to your child at their wedding.

Make regular gifts each year:

Gifts from your income are IHT-free immediately, with no upper limit so long as your living standard isn’t affected.

If you are looking to know more about IHT planning, please feel free to Book a free consultation with us now.