ClickCease Skip to main content

How to avoid Inheritance tax

First, if you want your beneficiaries to pay inheritance tax on your estate or are happy to loss a chunk of your inheritance to tax, you have come to the wrong place and there is no need to speak to a financial adviser at Woodward Financials.

Still reading? OK, staying below the Inheritance tax threshold is a good start, or you could reduce inheritance tax quickly by getting married, or walk down the high street giving £250 to every stranger you meet, but in most cases Inheritance tax planning is a little more complex, especially if the estate is worth over £1 million or exceeds the residence nil rate band or personal allowances.

You can obviously mitigate Inheritance tax with a trust, but do you want an expensive ‘Whole of Life’ policy increasing until death, there are options if left late but tend to be costly. There is no need for inheritance tax loopholes if planned correctly.

The best option is planning over several years, using a financial adviser to help with inheritance tax planning doesn’t cost the earth, Woodward Financials will create an inheritance tax mitigation plan that won’t impact your lifestyle in retirement as we have the very best inheritance tax calculator to work out whether you should gift money with a warm hand to a friend or family member now or later or make regular us of the annual exemptions.

Charity starts at home for some people, but gifting to charity can be a form of inheritance tax planning.

Gifts made are a ‘potentially exempt transfer’ and still subject to Inheritance tax, this is fully in the first three years and decreasing for a further 4 years, so perhaps a ‘gift inter-vivos’ policy to protect against this liability is warranted. These work well and only a few years ago, after only 18 months of the policy being in place, a substantial pay-out of 6-figures was welcomed to cover the inheritance tax due on the gift.

Putting property in trust can be complex, but the mechanics of doing this can incur taxes such as capital gains tax on disposal and periodic charges every 10 years, one solution I put in place reduced insurance premiums from £3000 per month to £700 per month, unfortunately this is a result of leaving inheritance tax planning too late.

Weddings are a perfect time to pass on an inheritance tax gift or pay for your funeral upfront, but these usually are not the best value, especially if death is a long way off.

You could always blow the lot, one day you will leave this world behind, so live a life you will remember, going through your bucket list of one hundred things to do before you die.

You can give away assets that are free of capital gains tax, but do remember ‘gift with reservation rules,’ or look towards agricultural land benefits, there are so many ways to mitigate inheritance tax when done correctly, time is all we ask.
Inheritance tax planning is a skill many do not have, a minefield you may not want to enter, navigating this comes with knowledge and experience. However, complex we can help. You also me be worried about care fees

For more information you can contact David on 01753 839348 or email davidwoodward@woodwardfinancials.co.uk