Clive Barwell TEP FCSI CFP

Clive Barwell
TEP CFP Chartered FCSI

Accredited Member of the Society of Later Life Advisers

Call me for a chat on
0800 074 8755

Blog | Inheritance Tax

How Does Inheritance Tax Work?

Inheritance Tax is usually paid on an estate (all assets, less any liabilities) when somebody dies. It's sometimes payable on trusts or gifts made during someone's lifetime (but only to companies, not individuals).

How to Reduce Inheritance Tax

Former Chancellor of the Exchequer, Roy Jenkins, once said, “Inheritance Tax is a voluntary levy paid by those who distrust their heirs more than they dislike the Inland Revenue”! Whilst the rules have been tightened-up somewhat since he said this, there are certainly many things that can legitimately be done to reduce the burden of Inheritance Tax.

Gifts and Inheritance Tax

Are inheritance gifts a good way to avoid Inheritance Tax?

In a word, yes! However, are you absolutely certain you can afford to make the gift in the first place? Have you enough income and other financial resources to maintain your standard of living throughout your retirement, come what may, even for future long-term care, for example? If so, gifts are a great way to reduce a future Inheritance Tax liability.

Inheritance Tax – Mitigation Using Business Relief

One of the most comprehensive reliefs from Inheritance Tax (IHT) is Business Property Relief (BPR). This has been part of the IHT landscape since the tax was first introduced in 1984 and, for many years, has provided 100% (originally 50%) relief for qualifying business assets.

Inheritance Tax – Normal, Habitual expenditure out of income

If it can be demonstrated that a pattern of gifting had been established and that the amounts gifted were demonstrably affordable out of normal income, those gifts are outside your estate immediately

Inheritance Tax | A Case Study using income

Written under a simple family trust, the policy proceeds then cost-effectively compensates the beneficiaries for some or all of the IHT on death.

Inheritance Tax Planning | A Case Study

Whilst Enid’s overriding concern is to maintain her own financial independence, come what may, she continues to be concerned about the impact Inheritance Tax (IHT) will have on her two sons when they eventually inherit.
Accredited SOLLA Advsior