Are you liable to Inheritance Tax?

The first £325,000 (2010 / 2011) of an individual's estate is taxed at 0% and is therefore not liable to Inheritance Tax. For married couples and registered civil partners it is currently £650,000, where the full allowance has been passed to the surviving spouse. Anything in excess of this amount is taxed at 40%.

The charts below show not only how easily the HM Revenue & Customs can become the single largest beneficiary of your estate, but also that the larger your estate the higher the percentage lost. 

The above illustrates an individual's estate.

The following courses of action can mitigate Inheritance Tax:

• Ensure your Will is written and planned correctly to save the maximum amount of tax

• Transfer assets through the prudent use of lifetime gifts

• Create a tax-efficient fund to enable the beneficiaries of an estate to meet the tax liability without disturbing the family wealth. Under IHT legislation, pensions can play a considerable role in estate planning. This stems from two factors:

• Death benefits under modern pension plans are broadly exempt from IHT although a liability to periodic and exit charges can arise in a limited number of circumstances.

• Adequate retirement income with spouse or civil partner and dependant's pensions may release capital for lifetime giving.

Although pension death benefits are broadly exempt from IHT, if they are passed to your survivor they will form part of their estate.
St. James's Place can offer solutions which allow your survivor access to your death benefits without them forming part of their estate.

We have a service, in conjunction with four leading law firms, which is designed to provide a wide range of differing legal services covering Inheritance Tax, Matrimonial Issues and general tax planning.

For further information, please refer to the St. James's Place Guide to Inheritance Tax, or contact us if you wish to discuss your personal situation.

The information on this website is based on our interpretation of the law and HMRC practice as at April 2010. Taxation legislation and HMRC practice may be subject to unforeseen changes in the future.

Wills and some areas of Inheritance Tax Planning are not regulated by the Financial Services Authority. Wills and the writing of them is a separate and distinct product to those offered by St. James's Place.