Inheritance Tax & Trusts

We’re very proud that VouchedFor has listed Vizion Wealth in the Sunday Times as one of the top recommended Chartered Independent Financial Advisors in the UK, along with Citywire nominating us as one of the Top 100 IFAs in the country. With a head office in Stony Stratford, Milton Keynes and a satellite office in Oundle, our team of advisors cover the surrounding areas including Buckinghamshire, Northamptonshire, Bedfordshire, Cambridgeshire, Rutland and Greater London.

Vizion Wealth approaches Inheritance Tax (IHT) Planning as part of a wider holistic financial plan which typically evolves over time. Understanding and considering your own long-term retirement and lifestyle goals is key before making provision for loved ones and implementing an inheritance tax planning strategy to reduce the potential liability to HMRC and increase the legacy passed to your chosen beneficiaries.

With pensions forming part of the estate for inheritance taxation purposes from April 2027, effective long term inheritance tax planning is now a priority for many to ensure you have an effective retirement strategy whilst balancing this with minimising the inheritance taxation paid on death and maximising the legacy paid to your loved ones.

Effective inheritance tax planning incorporates a wide range of strategies including drawing down investments and pensions in a tax efficient manner in retirement, drafting your will and power of attorneys correctly, utilising gifting exemptions effectively and the use of trust, insurance and inheritance tax exempt structures to reduce your liability.

Peace of Mind

Making sure that you’ve made plans for after you’re gone will give you peace of mind. You don’t have to be wealthy for your estate to be liable for Inheritance Tax, and it isn’t something that is paid only on death, as it may also have to be paid on gifts made during someone’s lifetime. The rate of Inheritance Tax on death is 40% and on chargeable lifetime transfers at 20%.

The Inheritance Tax threshold, or nil rate band (NRB), is currently at £325,000 for each person. This amount has been frozen at £325,000 since 2009, and the government have confirmed that it will remain frozen at this level up to 2030. There is no accounting for inflation, and therefore the effect of this freezing of the NRB is such that increasingly more estates may have an Inheritance Tax liability.

From 6th April 2017, a main residence nil rate band has also been introduced where the main residence passes to direct descendants. This now stands at £175,000 per person.

As part of an inheritance tax planning meeting, we will typically consider:

• Pensions, investments, assets and capital and how these will be utilised in retirement
• Wills and structuring your estate
  
• Utilising gifting exemptions
  
• Reviewing suitable term, whole of life and gift inter vivos insurance policies to reduce or cover your Inheritance Taxation Liability
  
• Restructuring existing investments and wealth into inheritance tax friendly structures

Various types of trusts to meet your needs

Inheritance tax planning utilising trusts can be an effective strategy to reduce your future liability. Trust planning can incorporate family trusts (including discretionary and bare trusts), discounted gift trusts, wealth preservation trusts or loan trusts to provide an element of access to capital or income during your life. Trusts typically remove capital from your estate while still providing an element of access, control and management of trust funds both during and after your life.

Alternative IHT Exempt Strategies

These may utilise business property or agricultural property relief and may incorporate tried and tested schemes such as Business Property Relief (BPR), Enterprise Investment Schemes or AIM portfolios.

With Inheritance Taxation being such a complicated area and pensions forming part of the estate from April 2027, seeking professional independent advice from an estate planning specialist at Vizion Wealth will ensure implementation of a robust, effective and bespoke inheritance tax planning strategy to preserve your family wealth in the future and minimise inheritance taxation paid after you have gone.

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Guide to Trusts

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