As Benjamin Franklin said, the only things that are certain in life are death and taxes, and inheritance tax touches on both of them.
While it’s not a nice thing to need to think about, planning what will happen to your wealth after you die is an essential part of financial planning. Inheritance tax and estate planning can be complex and often emotive subjects that go well beyond just taxation. They combine increasing personal financial security with the needs and dynamics of the family and potential beneficiaries.
Many people who do not consider themselves traditionally ‘wealthy’ may be surprised to see their potential inheritance tax bill, especially given increases in property prices.
According to the Office for Budgetary Responsibility, more than £5.36 billion of inheritance tax was collected by HM Revenue & Customs in the 2018/19 tax year*. This is a staggeringly high amount, especially considering that inheritance tax is one of the few taxes that can be legitimately mitigated by planning ahead. Remember, every pound paid in inheritance tax means a reduced estate for loved ones.
*Source: HM Revenue & Customs – Inheritance Tax Statistics
When starting to think about estate planning, two things are very important:
Understanding the full value of your assets: this includes your home, other property, savings, investments, retirement savings and insurance policies. Understanding this will allow you to understand the potential impact that inheritance tax could have on your wealth when you die
Understand your objectives: what do you want to happen to your assets on your death? Does your will reflect this? Are you prepared to provide regular gifts or give up ownership or control of some of your assets now, with a view to reducing your future inheritance tax bill? Do you want to make sure your wealth is structured in a way that will protect those closest to you, both on your death and into the future?
Please contact us on 01489 574355 or via the Contact page on our website, to arrange a free, initial no obligation consultation at our office in Park Gate, Southampton, Hampshire.
The Financial Conduct Authority does not regulate taxation and trust advice.