Inheritance Tax Planning

Inheritance Tax (IHT) has become a relevant issue to more and more of us, largely due to an increase in residential property values. The current IHT allowance is £325,000 – if the value of your estate on death is greater than £325,000 and you do not have a spouse, the surplus will become liable to a tax charge of 40%. Bearing in mind that your estate may include property, investments, life cover sums assured and other assets, the figure of £325,000 suddenly seems low.

The Chancellor of the Exchequer announced in his Pre-Budget Report that for deaths on or after 9 October 2007 it will be possible for spouses and civil partners to transfer their unused inheritance tax nil rate band allowances. Even if you do have a spouse to inherit then this only puts off the time when tax will be payable because he or she will also pass away one day.

Can IHT be avoided? It certainly pays to consider the various options open to you, in conjunction with assessment of your own personal circumstances, existing assets, current and future financial requirements and goals. Exemptions and reliefs do apply, and can be utilised as part of a holistic financial plan to ensure tax efficiency.

Not all Inheritance Tax planning products are regulated by the Financial Services Authority