As property values rise, in particular private residences, and with the freezing of the nil rate band since 2009, more and more people are getting caught up in the inheritance tax (IHT) net.
This does not constitute advice and advice should be sought in all instances before acting on it. The Financial Conduct Authority does not regulate tax advice.
The government’s aim is to earn as much revenue from IHT as possible, so of course, they’ll put legislation into effect to help. And in turn, many will seek ways to reduce their liability and increase their saving, which is why inheritance tax planning is so important.
Fundamentals of IHT planning
The primary options for IHT planning with the main residence are:
- Planning through lifetime gifts,
- Planning through the will and/or
- Provision through life insurance.
Each area requires the consideration of even further options, rules, and regulations. So, you’ll also need an understanding of a few concepts in order to make the most of your planning:
- Gifts with reservation rules (GWR)
- Pre-owned asset tax
- Capital gains tac (CGT)
- Ownership
- Transferable nil rate band
- Residence nil rate band (RNRB)
The transferable nil rate band in 2007 and the introduction of the residence nil rate band (RNRB) in 2017 has helped taxpayers. While IHT receipts have steadily increased in terms of annual revenue and as a proportion of GDP, they did fall in 2019/20. Some speculate it was because executors moved up tax payments to avoid increasing fees.
The ever-evolving state of tax legislation means tax planning can be complicated, so in order to maximise your savings and pass down an intact estate to your beneficiaries, get the help of an expert.
Plan with a professional
At Dental & Medical Financial Services, we specialise in incorporating tax affairs in the financial services and solutions we provide to doctors and dentists. Our clients can rest reassured that we have not only maximised and protected their wealth but we have also taken into account the impact our advice has on their overall tax position.
No matter your tax situation or tax-related goals, we’re here to help, so get in touch to maximise the performance of other areas of your property portfolio alongside your private residence.
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Dental & Medical Financial Services have been helping doctors and dentists to build and protect their wealth, whilst saving tax for over 25 years.