Inheritance Tax Accountant

Generally, anyone who dies domiciled (having their permanent home) in the UK is liable for IHT on their worldwide estate.

However, there are exceptions:

• Spouses and civil partners - If you leave everything to your spouse or civil partner, they usually won't pay any IHT. This also applies to any unused nil-rate band from your deceased spouse or civil partner, potentially doubling the tax-free threshold.
• Charities - If you leave your estate or a portion of it to a registered charity, no IHT is charged on that portion.

Below the threshold - If the total value of your estate, after deducting allowable debts and funeral expenses, is below the current nil-rate band of £325,000, no IHT is payable.

If your estate exceeds the nil-rate band, the standard rate of IHT is 40% charged on the exceeding portion.

However, several exemptions and reliefs can reduce your IHT liability:

• Residence nil-rate band - An additional tax-free allowance (currently £175,000) is available for the value of your main residence if passing to a direct descendant (child, grandchild, stepchild, adopted child, etc.). This band is gradually phased out for estates exceeding £2 million.
• Gifts - Making lifetime gifts out of your estate can reduce its value and potentially lower your Inheritance Tax bill. However, complex tax rules apply regarding the timing and value of such gifts, so professional inheritance tax advice is recommended.
• Business property relief - Relief is available for qualifying business assets, such as shares in a family business.
• Agricultural property relief - Similar relief is available for qualifying agricultural assets.

Your trusted advisor from Prescient Accounting will explore all possible tax-free allowances and further exemptions to make your estate as tax-efficient as possible.

Accurately determining the value of your assets is crucial for several reasons:

• Identifying potential Inheritance Tax implications - This allows you to understand if your estate might exceed the IHT threshold and require careful tax planning strategies.
• Ensuring fair distribution - Having accurate valuations helps ensure your beneficiaries receive their fair share based on your wishes, preventing potential disputes.
• Minimising compliance issues - Accurate valuations submitted to HMRC can avoid delays or potential penalties during the IHT process.

Prescient Accounting's inheritance tax specialists can also assist with:

• Identifying all relevant assets - This includes property, investments, savings, personal belongings, and any overseas assets.
• Obtaining accurate valuations - We can work with qualified valuers for various assets, such as property, businesses, and art collections.
• Compiling a detailed inventory - This comprehensive document will list and value all your assets for easy reference and IHT reporting.

Minimising your IHT liability to protect your family wealth involves proactive planning and using various strategies, such as:

• Making 'lifetime gifts' - Transferring assets to beneficiaries while you're alive (known as potentially exempt transfers) can reduce the value of your estate for IHT purposes. However, complex rules apply regarding the timing and value of gifts, and seeking professional advice is crucial to ensure compliance and maximise effectiveness.
• Succession planning - This ensures business continuity following the owner's departure, addressing issues like leadership and ownership transition, ensuring the smooth operation and future success of the business.
• Taking advantage of trusts - Establishing trusts can be an effective way to manage your assets and potentially mitigate IHT. Different types of trusts offer various benefits and complexities, so consulting an inheritance tax specialist is recommended to determine the most suitable option for your circumstances.
• Optimising existing investments - Reviewing your investment portfolio can identify opportunities to structure it to minimise Inheritance Tax liability. This might involve considering investments with specific tax benefits or adjusting asset allocation within your portfolio.

Our expert advice will ensure that your estate operates in a tax-efficient manner, so you can be confident that your financial affairs are in excellent shape.

Navigating IHT compliance can be time-consuming and complex. Prescient Accounting's specialists can assist by:

• Understanding your reporting obligations - Determining the relevant forms and deadlines based on your individual circumstances.
• Preparing and submitting IHT forms - We will ensure all necessary information is accurately compiled and submitted to HMRC within the deadlines.
• Calculating and paying IHT - We can calculate your IHT liability and guide you through the payment process, ensuring timely settlement to avoid penalties.
• Liaising with HMRC - Our team can communicate with HMRC on your behalf, addressing any queries or concerns arising during the process.

By taking care of these administrative burdens, we aim to:

• Free up your time and energy - You can focus on other important matters during a potentially stressful period.
• Eliminate the risk of errors or delays - Ensuring your IHT compliance is handled accurately and efficiently.
• Provide peace of mind - Knowing that your IHT obligations are being met professionally.

Collaborating with legal professionals is crucial to ensure your will is structured with IHT efficiency in mind. Prescient Accounting can work alongside your chosen solicitor or legal advisor by:

• Identifying potential IHT implications - We can assess your will provisions and highlight areas that might affect your IHT liability.
• Recommending IHT-efficient strategies - Based on your circumstances, we can suggest potential amendments to your will that might minimise the overall IHT burden on your estate.
• Facilitating communication - We can act as a bridge between you and your legal advisor, ensuring clear communication and seamless integration of IHT planning into your overall estate plan.

By working collaboratively, we aim to:

• Optimise your will for IHT efficiency - Ensuring your wishes are met while minimising the tax burden on your beneficiaries.
• Offer clarity and understanding - Explain any proposed changes to your will and their potential IHT implications.
• Achieve a comprehensive estate plan - Aligning your will with other IHT strategies for a cohesive and efficient approach to transferring your wealth.

Peace of Mind for Your Legacy

Dealing with inheritance tax can be a significant source of stress, especially during a time of loss. Our aim is to alleviate this burden and provide you with peace of mind in several ways.

First and foremost, we strive to provide you with clear and concise information about IHT, empowering you to understand your options and make informed decisions.

Inheritance tax in the UK is a tax on the estate of someone who has passed away. It's generally due from estates whose value exceeds the inheritance tax threshold.

An inheritance tax accountant can offer strategies and planning advice to potentially reduce your inheritance tax liability, such as utilising allowances and gifts effectively.

The current inheritance tax threshold in the UK is £325,000, above which estates may be taxed at a rate of 40%, subject to certain exemptions and reliefs.

Yes, certain gifts can be exempt from inheritance tax, including those given more than seven years before death and gifts to spouses, charities, and small gifts up to a certain value.

The seven-year rule in inheritance tax refers to the principle that gifts made more than seven years before the donor's death are exempt from inheritance tax.

Owning property abroad can still affect your UK inheritance tax liability, as UK residents are typically taxed on their worldwide assets.