Inheritance tax refers to the amount of tax owed on the estate of a deceased person. Once the value of the deceased’s estate has been calculated, at the time of their death, any outstanding debts and bills are deducted. Inheritance tax (IHT) is charged at a standard rate of 40%; however, each estate is also entitled to a ‘nil rate band’ (a tax-free sum).
With the assistance of our inheritance tax planning solicitors, you can reduce the amount of inheritance tax on your estate; dividing your cash and assets appropriately to optimise tax benefits. It is possible to mitigate inheritance tax by a variety of planning means. In broad terms, the main tools available comprise making the best use of exemptions authorised by the legislation or by intelligently using the nil rate band. At SMR Solicitors, we can advise on how to use these tools most effectively to reduce inheritance tax.
Our inheritance tax planning solicitors can assist clients with many legal matters relating to inheritance tax, including:
- Inheritance mitigation and inheritance tax planning
- Drafting a Will and estate planning
- Completing inheritance tax returns
- Establishing trusts
- Planning lifetime gifts
- Planning donations to charities
- IHT disputes
Get in touch with our inheritance tax planning solicitors in West Sussex
If you need inheritance tax advice and support, get in touch with our inheritance tax planning solicitors in West Sussex. You can contact one of our legal offices in Chichester, East Wittering, Selsey, or Bognor Regis. If you prefer, fill out our enquiry form at the top of our home page and a member of our legal team will contact you.
How our inheritance tax planning solicitors can help
Inheritance mitigation and inheritance tax planning
At SMR Solicitors we support our clients with intelligent and practical inheritance tax planning strategies. Our expert lawyers can prepare a thorough inheritance tax planning report to assess your current IHT obligations and options, and advise on an efficient tax planning approach. There are many options to lower the amount of inheritance tax on an estate, for instance:
- If an individual leaves all their assets that fall above the tax threshold to a civil partner or spouse, then they will not be required to pay inheritance tax.
- Pensions can be used as an effective tool for estate planning, as these accounts are often not subjected to inheritance taxes.
When you pass away, the likelihood is that you’ll want your property and assets to be passed on to your loved ones. Without a tactical inheritance tax plan, large portions of your estate could end up in the hands of HMRC. Our inheritance tax planning solicitors in Bognor Regis can support you to legally safeguard your estate for the benefit of your loved ones and their future.
A Trust is a fund containing assets that are for the benefit of a specific individual(s). They are governed by complex legal regulations and separate tax rules. A Trust can be set up at any time during the lifetime of an individual to become operative immediately or upon their death. Including a trust as part of your will can help you to lower the amount of inheritance tax on your estate.
At SMR Solicitors, we can provide trust administration services covering:
- trust set up
- winding up of trusts
- trust accounts
- arranging investment of assets
- change of trustees
- general legal advice on trusts
- book keeping
- maintaining bank accounts
- arranging distributions
- payment of trust expenses
- preparation of documents such as minutes and legislative deeds of appointment.
Drafting and Will and estate planning
Drafting a Will is an extremely important task, allowing you to protect your estate once you have passed on. Without a Will in place your estate will be organised and distributed according to intestacy rules. Under the rules of intestacy, the likelihood is that your estate may incur gratuitous inheritance tax.
To avoid non-compulsory taxes, it’s crucial that you draft a Will, to include a detailed plan of the administration of your estate. SMR Solicitors can support you with every aspect of drafting your Will, and organising your estate, including:
- Valuing your estate by reviewing your assets, property and debts.
- Choosing your beneficiaries, and deciding how you will divide your assets between them.
- Deciding who your Will executors will be and providing information about the duties of the executor.
- Planning to give portions of your estate to charity.
- Legal advice about the probate processes and applying for a grant of probate.
Completing inheritance tax returns
There is a 6 month deadline for inheritance tax, starting from when the person dies. If any owed inheritance tax is not paid by the end of month six, HMRC charge interest. Due to this, it’s vital that inheritance tax returns are completed before the deadline.
Filing inheritance tax returns can be a complex process, particularly if it’s a large estate with many assets to distribute. Our inheritance tax solicitors in Chichester can support you to file your inheritance tax return, correctly and on time, to avoid incurring interest. To learn more about completing an inheritance tax return, contact SMR Solicitors.
Arranging lifetime gifts
Lifetime gifts are defined as assets or money that an individual arranges to gift to their loved ones before that individual passes away. Lifetime gifts fall under two different categories:
Potentially exempt transfers: The majority of lifetime gifts are potentially exempt transfers. If the individual makes the gift and then continues to live for 7 years or more, that gift will have exemption from inheritance tax.
Reservation of benefit: If an individual has gifted their assets to another person, yet that individual has continued to benefit from the gift, these gifts are referred to as ‘gifts with reservation of benefit.’ It’s essential to report the value of the gift to HMRC, reflecting its worth when the person passed away.
As part of our inheritance tax planning service, SMR Solicitors can review your assets and savings, and help you to arrange appropriate lifetime gifts. Our inheritance tax planning advice can support you to retain the value of your estate; ensuring the security of your family when you have passed on.
Arranging donations to charity
If you choose to donate to charity, as part of your will, these charitable gifts can serve to reduce the amount of inheritance tax on your estate. However, the process is not entirely straightforward, you’ll only receive deductions under certain circumstances, which is why inheritance tax advice is essential.
Our inheritance tax solicitors in West Sussex can support your tax planning strategy, helping you to access a reduced rate of 36%, on the taxable portion of your estate.
When valuing the estate of someone who has passed away, it’s crucial that the will executor keeps records of all assets and their value, and then deducts any liabilities and assets. HMRC may ask for inheritance tax records, even years after the person has passed away.
If you are an executor and you are experiencing an inheritance tax dispute, our inheritance tax solicitors can support you with advice, and legal guidance. Our lawyers can explain your obligations and responsibilities and help you to reach a resolution.
Frequently asked questions about inheritance tax planning
What is the inheritance tax allowance?
According to inheritance tax law, everyone is eligible for a tax-free allowance on £325,000 of their estate. If a person’s estate is worth less than £325,000 that person will not have to pay inheritance tax. The allowance rate is referred to as ‘Nil Rate Band NRB’.
Estates that are valued over the £325,000 threshold are taxed at a standard rate of 40%, however, inheritance tax planning services can provide clients with a strategy to reduce the tax percentage applied.
Who is responsible for dealing with inheritance tax?
The Will executor is responsible for filing the inheritance tax return and paying the inheritance tax. It’s important to ensure that the inheritance tax forms are filed correctly, to avoid inheritance tax disputes. SMR Solicitors can offer guidance throughout the entire process, so that executors can be certain that they are correctly fulfilling their legal duties.