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Inheritance Tax Planning

The current allowance whereby no inheritance tax is charged is on the first £325,000 (per person) of someone's estate – which is the value of their total assets they leave behind when they die.

There are a number of way in which one can avoid a high inheritance tax:Inheritance Tax

  • Making gifts
  • Reducing estate while holding onto assets
  • Setting up a Trust

At Vance Financial Management, we offer a wide range of tried and tested inheritance tax solutions.

What We Do

Our team of experienced independent financial advisors will help you structure your finances in the most beneficial way. We can help you with:

  • Inheritance tax advice
  • Life insurance policies
  • Setting up discretionary trust
  • Setting up bare trusts

The Rules Around Inheritance Tax

Your estate is liable for Inheritance Tax if it is valued over the current £325,000 threshold when you die. £325,000 is the nil rate, meaning you will pay no tax on your estate up to this amount.

In addition to the inheritance tax (IHT) standard nil rate band, a residence nil rate band (RNRB) was introduced in 6 April 2017. This is available when residential property is left to direct descendants. Initially, the RNRB was set at £100,000 but increases by £25,000 each tax year until it reaches £175,000 in April 2020. Everything above this figure is taxed at 40%.

There are a number of ways you can lower your tax liability, such as making gifts to charity for example. There is also additional flexibility if your home passes to your children, grandchildren, or great grandchildren.

Life Insurance Policies

A life insurance policy that is written under an appropriate trust can be used to pay towards any inheritance tax liability, protecting your family from at least some of the tax bill. In usual circumstances the payout from a life insurance policy forms part of your legal estate and thus subject to inheritance tax.

In writing an insurance policy in an appropriate trust you will ensure that the policy is paid directly to the beneficiaries rather than your legal estate thus avoiding this being taken into account when inheritance tax is calculated.

Trusts

There are two main types of trusts: a discretionary trust and a bare trust, each of which has different structures and purposes that can be explained to you in detail by our advisors so you can decide which fits your requirements best.

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