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It’s an easy mistake to make. Many of us assume that our estate simply won’t be big enough to be subject to Inheritance Tax (IHT) but increasingly that’s not the case. It pays to know when your estate will be subject to IHT so you and your partner and descendants don’t get caught out.












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The current picture

Currently, any portion of your estate over the £325,000 threshold will be taxed at 40% when you die. This nil rate tax band can be passed to a married or civil partner, thus increasing the threshold before tax to £650,000. The residential nil rate band is currently £125,000 per direct descendant and will be applied in the 2018/19 tax year to main residence property wealth.

Passing of assets to a civil partner or spouse is usually exempt from inheritance tax, but problems can occur when they seek to pass on combined wealth. This is where forward planning is essential to protect your inheritance against the worst excesses of IHT.

Assess your assets

There are several assets that can tip your estate over the IHT threshold. Financial adviser software can help you to assess your overall wealth including money in the bank, investments, life insurance payments and investments. Property, proposed inheritances and financial gifts received in the 7 years before your death can all be included in an assessment of your IHT responsibilities.












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Intelligent software like Intelliflo can help with financial adviser software, helping you to create the most accurate picture possible of your inheritable wealth.

Managing your liability

You can manage your IHT liabilities by legally reducing or avoiding the tax you’ll be required to pay. Smart family tax planning and management of money gifts through a trust structure can be helpful, as can making substantial gifts to charity, which are always tax-free. Mitigating the impact of IHT now can help you legitimately preserve your wealth.

Establishing whether you’ll pay inheritance tax is the savvy way to develop a bespoke IHT plan that meets your particular circumstances that also takes into account other strategies including making a detailed Will. Seek professional financial advice and ensure that your money is working efficiently for you now – enjoying your wealth now and planning sensibly for the future will ensure that you and your descendants enjoy the lasting benefits of your financial acumen, not HMRC.