Wealth Preservation & Inheritance Tax

Wealth Preservation & Inheritance Tax

There are a number of ways of helping your heirs avoid having to pay inheritance tax.

Wealth preservation strategies will help secure a stronger financial future for you and your family. Within the next 10 years over £300 Billion will be transferred to around 300,000 inheritors.

To put this figure into context, it exceeds the £274 billion current administered by adviser firms on behalf of UK private clients. The sheer scale of forthcoming inheritance demonstrates the rising influence wealth transfer will have on the UK wealth management industry and those operating within it.  

Preservation of Wealth and mitigation of any Inheritance Tax (IHT) charge is more important than ever, at Imperial Chartered we are experts in wealth preservation for the next generation.

Inheritance tax is fast becoming one of HMRC’s largest revenue streams, so establishing your IHT bill will help you work out what to do.

Work Out the Value of your Estate

To work out the value of your estate, add up:

  • Any gifts you made in the last seven years that attract IHT (taxable lifetime gifts and any potentially exempt transfers)
  • Your property (including property abroad), cash belongings, savings and investments and life insurance paid to your estate on your death that’s not written under trust. Include your share of anything you own jointly.
  • Gifts you have made where you have retained some benefit – for example, a house you have given to someone but still live in.
  • Assets held in certain types of trust from which you get some benefit – an income, say.

After that, subtract the value of:

  • Your debts (such as a mortgage) and reasonable funeral expenses
  • Gifts that are exempt from inheritance tax (7 Year Rule)

What you pay

If the total is below the tax-free allowance (currently £325,000 for a single person or up to £650,000 for married couples, civil partners and most widows, widowers and surviving partners of a civil partnership), there’s no IHT to pay. If it is above the allowance, the excess is currently taxed at 40% when you die.

Needless to say, this can be a complicated area of Financial Planning and it is recommended that you seek professional advice and speak to our expert team.