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reduce tax liabilities and plan for a
tax efficient future

Inheritance Tax Planning (IHT)

Minimise Your Estate Tax

Inheritance has been a big source of income for the Government for some years. The threshold for IHT has been increased to £312,000 (Previously £300,000) for the current year, and there has been a change of legislation. The change will allow that in circumstances where one partner has already died, you can now transfer the unused proportion of the IHT allowance so that it is used on the death of the surviving spouse.

Example:

David and Janet married with 2 children. David died in January 2007, Janet dies in December 2008. Estate is valued on Janet’s death at £1.5 million, which is left to the children. Taxation on estate is worked out as follows:

There are different ways of minimising the tax liability of the estate, some of which are very straight forward and cost effective. These would include:

• Taking advantage of the annual £3000 gift allowance.
• Gifting excess income, that does not affect your normal standard of living.
• Potential Exempt Transfers ( PET ), making gifts that as long as you survive for 7 years from the PET it will fall outside of your estate for IHT.
• Taking out life insurance policies to help pay the IHT

There are other structures and investments that can be used to reduce your potential IHT liability which Carrington can advise you on. We can also put you in touch with a solicitor to arrange your Will and set up any trusts should that be necessary.

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