You spend your lifetime building up your personal wealth assets, it is important therefore to make these assets work for you and to protect them as much as possible against inheritance tax.  Ultimately, we all want our assets to go to our chosen beneficiaries and not to the tax man.

Inheritance tax is a tax on your wealth and it is at a flat rate of 40% on assets above the nil rate threshold.  The current Nil Rate Band (NRB) is £325,000, or £650,000 for a married couple.  With the escalation in house prices over recent years, this could easily mean a problem for many people.

The Government has frozen the NRB, but there was a welcome introduction of the Residence Nil Rate Band (RNRB) on 6th April 2017, which added a further £100,000 per individual if there was a main residence that is bequeathed to lineal descendants. The RNRB increases by £25,000 per tax year until 2020/21; so at the beginning of that tax year, the RNRB will be £175,000. However, it is very complex and there are some caveats and traps, for example, an estate valued at over £2 million would begin to lose the RNRB by £1 for every £2 above that threshold.

There are a number of ways to reduce the potential inheritance tax liability on your estate, but they do involve careful planning.  This is usually over a long period of time, immediate solutions are generally not effective or not available. We work closely with your legal advisers to make sure that you are able to maximize the reliefs and plan effectively.

A vital aspect of estate planning is to ensure that your Will is properly structured and that your assets are invested in such a way that you will try and minimize the effective inheritance tax.  At the same time, you need to ensure that you have enough capital to generate the income that you need, but also to reduce the final inheritance tax bill.

We will work closely with your family solicitor, or help introduce you to a solicitor if you haven’t got an existing relationship.  We work closely with a couple of local firms, who have provided an excellent service to our clients regarding Will planning and setting up Lasting Powers of Attorney.

As you will be aware, recent changes in pension legislation and other legislation mean that this is an ongoing and important discussion to have as part of your regular review.  We make sure that estate planning is an integral part of our annual review agenda.

The Financial Conduct Authority does not regulate tax advice or wills.