Inheritance Tax (IHT)
Inheritance Tax (IHT) is potentially payable when an individual transfers value from their estate. This transfer may take place during the individual’s lifetime or on their death.
Chargeability to IHT depends on many factors such as:
So, there are a few good reasons why it is beneficial for you to take advice on any transfer or gift of your assets during lifetime or on death to review whether there are any opportunities to reach your objective and minimise tax along the way.
Gifting assets and value during lifetime
There are many instances where you may gift your assets or value to others during your lifetime and these gifts (transfers) will have a tax effect in some way shape or form:
All of these examples have the potential for an inheritance tax liability and it’s important to be aware of this before you make an informed decision.
In addition, there could be a potential for a capital gains tax to apply instead, or in addition to inheritance tax.
There are ways to reduce or minimise the amount of inheritance tax and capital gains tax on the gifting of assets and so we recommend that you get in touch with Amanda sooner rather than later to review your options.
Amanda has over 25 years of experience in the setting up and winding down of trusts and she regularly consults to other practices on these matters.
Take a look at our page relating to Trusts and Estates.
Gifting assets and value on your death
Inheritance tax is sometimes payable on death, when the assets within your estate are distributed to your beneficiaries, either via your will or the rules of intestacy in cases where a will does not apply.
The chargeability to IHT arising on an estate at death depends on my factors, including:
Tax planning
You do have an amount that is inheritance tax free. Some or all of your gifts may be exempt. Your estate may also qualify for inheritance tax reliefs.
In chargeable situations, there are many ways to minimise the amount of Inheritance Tax. This is all within legal and available rules within the tax legislation.
All legal, all above board, all very moral if that is your concern. Simply just complying with the various methods within the tax legislation for calculating your tax liabilities.
Simply, tax planning is the use of tax legislation to ascertain various methods in which a transaction can take place and comparing the tax outcome. Then, you can make an informed decision on how to make your gifts.
The key point is to consider the wider aspects. Your situation, your objectives, your wishes. Also, the wider taxes – have you considered not only inheritance tax, but checking to see whether any other tax can be mitigated or whether there is tax planning opportunities. Also, to check that your documentation is correctly aligned to your objectives ……the whole tax picture.
This is where Amanda’s experience of layering tax effects and combining those taxes comes into fruition.
One of the things the ajftaxation team love about our business is the diverse approach we can take to supporting our clients. Tax planning is a convoluted process, with twists and turns at every stage, and we pride ourselves on effectively dealing with the interplay that different tax systems can present.
Capital Taxes
Capital Taxes is a term to describe the main capital taxes such as Capital Gains Tax (CGT) and Inheritance Tax (IHT). Stamp Duties are often included in the mix.
The capital taxes apply mainly to assets and the transfer of these assets during either lifetime or on death. Whenever an individual wishes to make a disposal or a transfer of assets to another, whether this is during lifetime or on death, this will always have an effect on the capital taxes. It may also have an impact on your current Will. So it’s highly recommended that you take a moment to have a brief review to ascertain your tax position.
Contact Amanda for a review
It is preferable to have Amanda review your position, especially before drafting or redrafting your will and this is to consider what tax planning opportunities are available to minimise IHT, but to also consider your objectives.
Amanda offers a brief review, for no charge or commitment. This will enable her to consider whether there are any tax planning opportunities available and tax reliefs to gain from. It will also help to ascertain any issues, such as any criteria that needs to be met in order for valuable inheritance tax reliefs to apply, or to establish any liabilities or other tax problems that you might not be aware of.
It is always important to Amanda that no fees or charges are committed to unless there is a benefit to do so.
