Over the last few years, the Covid pandemic has shone a light and made many of us realise that life may be short, but it is also a gift and we need to make sure that we use our time on this earth wisely.   

While thinking about inheritance tax planning is not something any of us wants to do, being well prepared can actually bring you peace of mind, knowing that your affairs are in order and the future is safe.

You have no doubt spent many years working hard to accumulate your wealth and assets and it is important that you can pass these down to your future generations in the most tax efficient way possible. Paying the taxman a large chunk of wealth unnecessarily is not likely to be on anybody's bucket list...ever!

As this is such an important subject, we are offering a free IHT health check to our clients in March and April 2022 - just get in touch and we'll do the rest!

IHT Planning Case Studies

We have worked closely with many of our clients to review their financial positions and have provided carefully thought-out solutions to protect and optimise their wealth for inheritance tax planning purposes.

Case Study 1

Mr & Mrs Smith own their own home, a smaller property (which they have rented out) and have cash and investments. Their total combined estate was worth £ 1.5m.

Both receive healthy pensions, so they have typically gifted the rental profits and other lump sums to their children over the years.

Under current legislation, they would qualify for two nil rate bands and two residential nil rate bands, totalling £ 1m. This leaves £ 500,000 exposed to a 40% IHT charge.

How we helped...

We set up a framework that included advising on gifting assets now. Early planning meant that their estate would reduce for IHT purposes, saving a potential £200,000 in inheritance tax (providing both parties were still alive after a period of 7 years).

Case Study 2

Mr Adams owns a controlling stake in the family trading company and has 4 children and 12 grandchildren.

The company is valued at £ 20m and has significant profits each year, which are accruing in the company as he doesn’t need to draw down the income. The concern with this situation is that large cash balances in a company can affect whether the company value itself is free from IHT on death.

How we helped...

He gifted his shares into a lifetime trust for the benefit of the grandchildren, which allows them to benefit from dividends of up to £ 14,570 each without any tax charge. Whilst the money is for the benefit of the grandchildren, it can be used for school fees, houses, cars etc. which clearly benefits the family overall as they would have been helping to finance such things anyway.

This means £ 175,000 profits per year can be distributed to the grandchildren without any income tax burden...and of course passing wealth to the younger generation is sensible IHT planning in itself!

Get in touch - we are here to help!

If you have any queries or would like to take advantage of our free IHT health check, please get in touch with us by calling 0121 693 5000.