Inheritance Tax Planning
We can help you ensure your family is looked after properly when it comes to passing on your assets.
“Inheritance Tax, is broadly speaking, a voluntary levy paid by those who distrust their heirs more than they dislike the Inland Revenue.” Former Challencor of the Exchequer, Roy Jenkins, 1986
Understanding inheritance tax
Inheritance tax (IHT) is a tax on money or possessions you leave behind when you die – and on some gifts you make during your lifetime.
Whilst the above quote may be a slight exaggeration, there is certainly no need to pay more IHT than you absolutely have to. That’s why it’s known as the UK’s only ‘voluntary tax’.
With the benefit of careful planning, IHT can certainly be reduced or even avoided completely.
IHT is affecting more and more people as house prices and the value of assets rise. This is also being compounded by the Government’s long-term freezing of the nil rate band, which is the amount of money that can be passed on tax-free.
Why planning is critical
At Compass, we specialise in ‘bloodline planning’ which means we work with you to ensure that your estate is passed to your family members as opposed to being taken by the Government. After all, can you honestly say that you prefer the Inland Revenue to your nearest and dearest?
It’s also worth knowing that in the event of your death, some or all of your assets will be frozen and only released to your loved ones once the outstanding IHT has been paid. This means that your family cannot wait until they inherit your assets to pay the tax (also known as the liability) – they have to find the money themselves to temporarily cover this cost.
With the average IHT liability in the UK being £166,000, you should ask yourself whether you are you comfortable leaving this potential financial burden to your friends and family.
Benjamin Franklin said in 1789: “There are only two certainties in life – death and taxes“. While this quote is from many years ago, it is without doubt as true today as it was then. Inheritance tax is the place where these two great certainties meet head on.
How can Compass help me plan for inheritance tax?
At Compass, our independent advisers will work closely with you to develop a personalised Inheritance Tax Planning strategy. With careful planning, we will help to ensure the maximum after-tax value of your estate, enabling you to pass on as much as possible to your beneficiaries.
The Financial Conduct Authority does not regulate Inheritance Tax and trust planning.