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Inheritance Tax is a charge levied on your ‘estate’. Broadly speaking, it is a tax levied on the value of everything you own at the time of your death, minus what you owe. It is also sometimes paid on the value of assets you have given away during your lifetime – assets such as property, investments, money and possessions.

Not everyone pays inheritance tax on death, it only applies to assets over a set amount, £325,000 currently (2021/2022 tax year). It is also possible to use both nil rate bands for married couples and civil partnerships making it possible to leave up to £650,000 without liability to IHT. The residence nil rate band, dubbed the “family home allowance” is £175,000 of extra allowance per individual.

Extra allowance will not apply if the estate is too large, the house too small, or if the property passes to anyone other than children, stepchildren and grandchildren of the deceased, or their spouses / civil partners. Assets passed via a discretionary trust does not therefore qualify, because assets do not pass directly to direct descendants.

Despite this, a large number of people in the UK will be subjected to inheritance tax due to rising house prices. Most people are also unaware of their annual allowances and ability to make gifts to help mitigate inheritance tax.

Whilst inheritance tax has been declared a ‘voluntary levy’ in the past, which is perhaps slightly unfair, it is clear that most people are unaware of the ways to help mitigate the amount of tax payable when they die. Many people would be very concerned to find that they are leaving large sums of money to the tax man, when it may be possible to leave more to the people they leave behind.

Inheritance tax is a very complicated area of advice, and we find that each client is different. At Perspective (North West) we are well qualified to advise on a variety of different solutions to suit your individual circumstances. We take the time to clearly describe how the tax works, the implications to you of making no provision and the advantages and disadvantages of various different options.

The first port of call is to make a tax efficient will. Following that, we like to work alongside your solicitor and/or accountant to structure your inheritance tax solution.

Please remember, the tax charge levied on death is 40% of the amount above the nil rate band, if you do nothing, your estate may pay a higher rate in death than you paid in your lifetime.

Level, bases of and reliefs from taxation are subject to change and their value depends on the individual circumstances of the investor.

The Financial Conduct Authority does not regulate taxation and trust advice.

Registered in England and Wales No 4719736. Registered Office. Lancaster House, Ackhurst Business Park, Foxhole Road, Chorley Lancashire PR7 1NY.
Perspective (North West) Ltd is authorised and regulated by the Financial Conduct Authority.
Perspective (North West) Ltd is a subsidiary of Perspective Financial Group Ltd.

Should you have cause to complain, and you are not satisfied with our response to your complaint, you may be able to refer it to the Financial Ombudsman Service, which can be contacted as follows:
The Financial Ombudsman Service Exchange Tower,
London, E14 9SR
Tel: 0800 023 4567 or 0300 123 9 123

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