Benjamin Franklin famously wrote: “…in this world nothing can be said to be certain, except death and taxes.”
It stands to reason, then, that most people will eventually need Inheritance Tax planning, care planning or both.
The elderly are far more likely to need these services although Inheritance Tax (IHT) and care planning is usually far more beneficial to children than to parents. After all, the main aim of Inheritance Tax planning is to ensure that children inherit much more of the wealth their parents spent a lifetime accumulating, rather than see it swallowed up by IHT and care home fees.
Inheritance Tax Health Check
Each person has a tax-free allowance or ‘nil rate band’ on their estate. This means that their estate won’t incur Inheritance Tax if it’s under a certain amount. The threshold for the 2017/18 tax year is £325,000.
From 6 April 2017, each person will get an additional £100,000 (rising to £175,000 by 2020-21) tax-free allowance to use against the value of their home (subject to circumstances).
If taxable estates exceed this amount, the balance will be taxable at 40 per cent. In these cases it would be worthwhile to implement planning to mitigate the exposure to Inheritance Tax.
Trust funds can be an effective way to take assets out of estates, to hold standalone and/or to pass assets down the generations when beneficiaries come of age. They may also be an effective way to avoid future family feuds and to ensure assets reach their intended destination.
Smailes Goldie’s team of tax specialists can implement tax planning and asset protection through the medium of trusts. We are also able to deal with all areas of routine accounting and tax compliance, as well as the day-to-day administration.