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Although the content of the article(s) archived were correct at the time of writing, the accuracy of the information should not be relied upon, as it may have been subject to subsequent tax, legislative or event changes.
A word from the office - March edition
March is here already! Mav has been enjoying the spring sunshine. We have been busy settling into our new home and the Advisers have been busy ensuring their clients have maximised their tax-efficient savings and investment opportunities and are ready for the new tax year. ‘Spring cleaning’ their finances if you will!
Monthly Headline from Quayside:
The end of the current tax year and beginning of a new one is a perfect time to ensure you have the right plans in place for the future. Inheritance Tax is a subject that often leads to many questions, so this month we want to try and provide you with some top tips when thinking about inheritance tax planning and how financial planning can be instrumental in mitigating inheritance tax liabilities:
- Know the Basics: Inheritance tax is a tax on the estate (the property, money, and possessions) of someone who has passed away. In the UK, there is a tax-free allowance called the "nil-rate band", which is the amount up to which an estate is not subject to inheritance tax. As of 2024, the NRB is £325,000 per person. Anything above this threshold is taxed at a rate of 40%.
- Understand Exemptions and Allowances: There are several exemptions and allowances in place to reduce the impact of inheritance tax. The main ones include the spouse or civil partner exemption, which allows you to pass your estate to your spouse or civil partner tax-free. Additionally, there is a residence nil-rate band, introduced in April 2017, which applies when passing on a main residence to direct descendants (children or grandchildren). It's important to understand these exemptions and allowances to minimize the tax liability on your estate.
- Plan Ahead: Inheritance tax planning involves taking steps during your lifetime to minimise the tax burden on your estate after your death. This could involve making gifts, setting up trusts, or taking advantage of other tax-efficient strategies. Planning ahead allows you to make informed decisions about how to structure your estate to maximise the assets passed on to your beneficiaries.
- Life Insurance Policies: Life insurance policies can be structured in a way that the proceeds are paid into a trust, which can be used to cover any inheritance tax liability. This can ensure that beneficiaries receive the intended inheritance without being burdened by a significant tax bill.
- Pension Planning: Certain pensions can be passed on tax-efficiently, making pension planning an important aspect of inheritance tax mitigation. By structuring pension arrangements appropriately, individuals can ensure that their pension benefits are passed on to beneficiaries in a tax-efficient manner.
- Seeking Professional Advice: Given the complexities of inheritance tax laws and regulations, seeking advice from Financial Advisers is crucial. These professionals can help individuals develop personalised financial plans tailored to their specific circumstances and goals, including minimizing inheritance tax liabilities.
Overall, effective financial planning can play a significant role in reducing the impact of inheritance tax and ensuring that assets are passed on to beneficiaries in a tax-efficient manner. It's essential to start planning early and regularly review your financial situation to adapt to any changes in tax laws or personal circumstances.
Last Month’s Headline
End of tax year planning – Have you maximised your tax-efficient savings and investment opportunities?
Further Insights
If you’re interested to read further, we also have more useful information on our website which can be found here.
Upcoming Events
Pied Piper Quiz – Thursday 21 March Time: 6.30 arrival for food, quiz starts at 7pm till late. Location: The fountain Inn, Gloucester.
Contact your Adviser
If you’d like to discuss more about this month’s topic, please book a call with your adviser here.
The value of an investment with St. James's Place will be directly linked to the performance of the funds you select and the value can therefore go down as well as up. You may get back less than you invested.
The levels and bases of taxation, and reliefs from taxation, can change at any time. The value of any tax relief is generally dependent on individual circumstances.
