Inheritance Tax Planning

As they say, the only certain things in life are death and taxes. Unfortunately, even when you pass away, you don’t stop paying taxes! Inheritance tax can be a very delicate topic as you have worked all your life to build up an estate, investments, cash or equity and then when you pass away, you have give a sizeable chunk to ‘the tax man’.


The rules concerning Inheritance Tax have also changed recently. We can help you plan for this and ensure you are aware of all the avenues that you can take to safegaurd what you leave behind.

What is Inheritance Tax?

Inheritance Tax is a tax paid by a person who inherits money or property or even a levy on the estate of a person who has died. – This is after inheritance tax allowances are deducted.

This is currently (as of 8/8/18) 40% on anything above the £325,000 Inheritance Tax Threshold (excluding the ‘Main Residence Allowance’ as seen below).

What constitutes your worth includes Cash in the Bank, Investments, Property, Business and Vehicle (to name a few).

Main Residence Allowance

New for the 2017/18 tax year was the additional ‘main residence’ allowance. It is only valid on a main residence and where the recipient of a home is a direct descendant (classed as children, step-children and grandchildren). This is gradually being phased in as follows and is what you’ll get on top of your existing allowance:

  • For this tax year it’s starting at £125,000 (meaning a total allowance of £450,000), rising by £25,000 each year till it reaches £175,000 (meaning a total allowance of £500,000) in 2020.
  • So now the maximum that can be passed on tax-free is £900,000 for married couples or those in a civil partnership, £450,000 for others. For singles, this is made up of the existing £325,000, plus the extra £125,000. For couples, when the first one dies their allowance is passed to the survivor, so that £450,000 is doubled to £900,000.
  • In 2020, the tax-free amount will rise to £1 million for couples (made up of £325,000 x 2 plus £175,000 x 2) and £500,000 for singles (made up of £325,000 plus £175,000), as the main residence allowance rises.
  • On properties worth between £1 million and £2 million, inheritance tax will be paid as normal on the amount above the tax-free amount.
  • On properties worth £2 million or more, homeowners will lose £1 of the ‘main residence’ allowance for every £2 of value above £2 million. So for a couple, properties worth £2,350,000 or more will get no additional allowance.

Inheritance Tax Planning

Estate Planning and Inheritance Tax planning is all about developing strategies for the use of your accumulated wealth. While spending the wealth is one obvious option, most people wish to strike a balance between providing for their own needs and cascading wealth down through the family.

Use of the right combination of TRUSTS can allow you to maintain control over your capital while earmarking it for others on your death, which may fall outside your estate for Inheritance Tax purposes. It is also possible to place assets in trust while continuing to take an income from them.

The amount being left upon death can also reduce dramatically if Long Term Care Fees have diminished your inheritance pot. We can help you with CARE FEE PLANNING to alleviate costs when illnesses strike at old age by implementing viable planning which also help keep the pot a much higher figure for your loved ones when you pass away.

Our Advisers

Our fully qualified and independent financial advisers will assess your needs and advise on the most appropriate product for your needs.

Covering Plymouth, Cornwall, Devon and the South Coast of the UK, we’ll have an adviser that can visit you locally in your home or business to assess your needs.

We are here to offer you financial advice in Torquay, but we also have other offices to help you with financial advice in Devon, Plymouth, Cornwall, South West, Bristol and London.

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