Inheritance Tax (IHT)

Inheritance Tax (IHT) used to be something only "wealthy" people needed to consider. This is no longer the case. Soaring house prices and the Government's failure to raise the minimum threshold at a rate faster than inflation means that more and more people are likely to be affected.

WE CAN SHOW YOU HOW TO AVOID PAYING ALL INHERITANCE TAX APPLY NOW FOR MORE INFORMATION.

How can we help?

We have considerable experience in the design and implementation of IHT mitigation schemes for our clients. Some of these can be complicated but there are also some basic inexpensive steps, which can create immediate benefits in the majority of cases.

Some are only applicable to married couples but there are also steps that single people should take. The introduction of 'civil partnerships'  has however extended the planning options for unmarried couples. The vital feature is that in mitigating the tax liability, you should not risk your lifestyle by reducing income, access to your capital or, in giving away your property, lose the right to remain living there.

What can you do?

There are simple steps that you can take which will help reduce your inheritance tax liability. However most of our clients require a more structured solution and avoid paying all inheritance taxes which can be done with good financial planning.

With threshold currently at £285,000 (2006 / 2007) most people in the UK will fall outside this banding. And the beneficiaries of their estates will have to pay a substantial tax bill.

Many of these beneficiaries will not have the funds to pay such a bill, as the funds need to be paid to the revenue before they will release the estate. Therefore your loved ones will not be able to sell off assets within the estate to pay the outstanding tax bill.

Basic measures

For married couples it is generally sensible for there to be an equalisation of the estate as this will ensure that both parties use their £285,000 'nil rate' band tax allowance. In many instances the easiest way to do this is to change the way in which your property is held . We can arrange this inexpensively, but it can save £114,000 in tax.

It is essential to seek the advice of a practice skilled in tax planning, as increasing the powers of trustees can improve the tax saving potential while allowing you to benefit from your assets, which can be organised in line with your wishes.

You should ensure that existing life assurance contracts are written in trust (although changes in the Budget 2006 may alter this position) . Lark Capital Planning can generally arrange for existing policies to be placed into specific trusts.

In addition to each party using their nil rate tax allowance, it is also possible to save considerable tax by other exemptions. These include the £3,000 per year annual gift exemption and if affordable, gifts out of income and the facilities for small gifts and wedding gifts.