INHERITANCE TAX
Inheritance Tax does not have to be taxing. Find out why.
Our proactive approach to tax protection
In England and Wales, we have a complex tax system regarding Inheritance Tax. It is a tax many people will have heard of from friends or via the media but perhaps do not fully understand.
Here at Hamilton Legacy we have an in-depth understanding of it thanks in part to two decades of experience helping our clients navigate it.
Inheritance Tax is seen as a voluntary tax. In other words, if you take proactive, preventative action with Hamilton Legacy, you can then choose not to be subject to it – or at least to mitigate it to the benefit of the ones you love.
Many fall foul of this law and pay unnecessary tax, either because they are not aware their estate could be liable to a tax bill or they do not take appropriate Estate Planning advice to best protect them against over-paying tax.
INHERITANCE TAX ADVICE
We can help, and as part of this process we will find out:
- whether your estate could be subject to this tax liability, either when you die or when your surviving partner dies
- what tax reliefs you qualify for under HMRC rules
- what exemptions you qualify for under HMRC rules
- if you are an unmarried couple (whether same sex or mixed sex), what can be put in place as you are more vulnerable to Inheritance Tax than married or civil partnered couples
- what is your ‘domicile’ as this will affect the Inheritance Tax you may pay
- what lifetime planning we can put in place to mitigate your Inheritance Tax bill
- what Trusts may be required to mitigate your Inheritance Tax bill
Why do we work this way?
Experience and years of positive feedback from clients tells us that no two people are exactly the same, so every service we offer is crafted with you in mind.
Similarly, there are common themes meaning we can advise you no matter what your personal situation. We utilise all the reliefs and exemptions available including the Nil Rate Band, the Residence Nil Rate Band, Business Property Relief, Spousal Exemption, Annual Exemptions and Gift Reliefs to name just a few!
All of that means we can confidently find a way forward to mitigate against your Inheritance Tax liability while you feel secure in the knowledge this has been done, alongside the creation of a Will tailored to suit your needs.
“Inheritance Tax is a voluntary levy paid by those who distrust their heirs more than they dislike the Inland Revenue.” Roy Jenkins
Do these clients have an Inheritance Tax bill to pay?
Francis and Karen have worked very hard to build up their estate and are looking to retire. They have a lovely home worth £600k and a small property portfolio of rental properties worth £500k and they have just sold their business for £500k. They have paid into a pension that should also leave them comfortable in their retirement but, until the recent sale of their business, they never felt rich as their income has always been very similar to their outgoings.
They are not worried about inheritance tax as they know they have a £1 million inheritance tax relief.
But, have they? A thorough investigation would need to be made to see who owns what and what debt is against each asset. For example, do they have a mortgage on their home? And, in their specific case, if it is more than £250k then they will not get the full £1 million tax allowance.
Frequently Asked Questions
Will I have to pay inheritance tax – it’s £1 million, isn’t it?
Everyone thinks they now have £1 million before they have to pay Inheritance Tax. That may not be the case and in many circumstances, it is not. There are various allowances and enhancements that potentially make up that figure of £1m but not everyone meets the criteria. This will be covered at your appointment as part of assessing whether your estate could be taxable.
My house in France doesn’t count for tax if I die, does it?
If you are ‘domiciled’ to England and Wales, then your Worldwide assets are accounted for within your estate for inheritance tax purposes, even if you have a Will in the country where your property is located. The Will in that country controls the distribution and succession of your estate in that country and often follows the ‘fixed succession’ laws of that country. If you are not domiciled to England or Wales, there are different considerations. We would be pleased to discuss this at our appointment.
Will I get taxed if I give away more than £3k in a year?
It is very common for people to get confused and concerned with not exceeding their £3k annual allowance. Yes, everyone is entitled to gift £3k a year (and £3k for the previous tax year, on a rolling basis, if you did not use your annual allowance last year) but you can give away as much as you want in excess of £3k without causing a tax bill in your lifetime. The only time this becomes an issue is if you were to die within seven years of gifting. If you do then that gifted amount is just regarded by the HMRC as not having left your estate at all and is counted as part of your taxable estate for inheritance tax purposes. So, you have not caused an additional tax bill by gifting it. There are many misconceptions with gifting money so please ask us at the appointment if you feel this would concern you and your estate.
What difference does it make to Inheritance Tax if we are married or not at my death?
This depends on the value of your estate. Not being married can cause an unnecessary inheritance tax bill at first death and then again at second death. If you were married, there may no longer be a tax bill at first death and enough time to mitigate or eliminate a tax bill at second death. Certainly, as well as the potential tax bill, not being married without a Will can be disastrous in that your partner is not entitled to inherit from your estate at all, whereas a spouse can.
What Happens Now?
“It’s never easy talking about death, but we gently guide you through this – making sure those you love get what you want them to have.”
Feel free to contact us for an in-depth discussion about your options, our fees, the process or anything else. Just pick up the phone or send us an email. We know from previous client experience that you will be pleased you did.