Ah, the grand old tradition of passing down treasures to the next generation! It’s like a family heirloom or Grandma’s secret recipe, only it involves more than just antique watches and tasty pies. We’re talking about your hard-earned money, properties, and assets. In the UK, there’s something rather essential that often gets overlooked in this handover – inheritance tax planning.

Now, you might be thinking, “Tax planning? Sounds as thrilling as watching paint dry.” But stick with me, dear reader, for there’s more to this story. It’s a tale of preserving what you’ve worked hard for and making sure it reaches the right hands without HM Revenue & Customs taking a big bite.

INHERITANCE TAX: A QUICK PRIMER

Imagine your wealth as a scrumptious pie. Now, if you don’t plan accordingly, a good slice of that pie might go to the taxman. In the UK, if your estate (that’s everything you own) is worth more than £325,000, there’s a 40% tax on anything above that threshold. It’s like going to your favourite pie shop only to find out they’re taking 40% of every pie!

WHY PLANNING IS YOUR BEST MATE

You wouldn’t embark on a grand adventure without a map, would you? The same goes for passing on your estate. Here’s why Inheritance Tax (IHT) planning is so important:

1. SAVE YOUR FAMILY’S PIE

With some clever planning, you can reduce or even eliminate the amount of inheritance tax your family will have to pay. There’s something quite satisfying about knowing that the fruits of your labour will fully benefit your loved ones.

 

 

2. IT’S MORE THAN JUST MONEY

We’re not just talking about cash here. We’re talking about homes filled with memories, family businesses, heirlooms, and more. Proper planning ensures that these sentimental assets aren’t sold off to pay the tax bill.

3. GENEROUS GIVING

If you’re charitably inclined, there are ways to support your favourite causes while reducing the Inheritance Tax bill. It’s like having your pie and sharing it with others too!

4. PEACE OF MIND

Like a cosy cup of tea on a rainy day, knowing that everything’s sorted gives you and your family peace of mind. There’ll be no nasty surprises or financial burdens to deal with during an already emotional time.

 

 

WHEN TO START? THE TIME IS NOW!

Inheritance Tax planning isn’t something to leave for “someday.” It’s a bit like planting a tree—the best time was 20 years ago, the second best time is now. Engaging with a financial advisor can make the process as smooth as a perfectly baked pie crust.

CONCLUSION: A FAMILY LEGACY, TAXMAN NOT INCLUDED

Inheritance tax planning is more than just a dull financial chore. It’s about preserving your family’s legacy and ensuring that what you pass down isn’t chipped away by taxes. It’s about love, memories, hard work, and a future that you have a say in shaping.

44% of individuals with assets totalling £1 million or more have not sought any advice on Inheritance Tax planning, a new study has revealed.

What’s more, according to research conducted by Investec Wealth & Investment, 21% of millionaires do not have a Will in place to guide the division of their estate.

 

 

It was also revealed that more than two out of five individuals (42%) have not taken any measures whatsoever to reduce potential IHT bills.  As well as this, among those planning to transfer wealth, 54% have not discussed it with the intended recipient and 14% have no intention of doing so.

This apathy comes despite government statistics indicating a significant increase in total IHT payments which rose by £1 billion last year to approximately £7.1 billion.

So, grab a pen, gather your financial papers, and let’s make a plan that lets your wealth live on through generations, with all the love and care you’ve put into it. After all, your family’s inheritance is a treasure; let’s make sure it’s a full pie, not a slice short!  You know it makes sense.*

 

*RISK WARNING

The Financial Conduct Authority does not regulate taxation advice, Wills,  estate planning or inheritance tax planning. The information provided in this article is for educational purposes only and should not be considered financial or investment advice. Please consult with a qualified professional before making any investment decisions. The value of investments can fall as well as rise. You may not get back what you invest. The information contained within this blog is for guidance only and does not constitute advice which should be sought before taking any action or inaction. All information is based on our current understanding of taxation, legislation, regulations and case law in the current tax year. Any levels and bases of relief from taxation are subject to change. Tax treatment is based on individual circumstances and may be subject to change in the future. This blog is based on my own observations and opinions.