Top 10 Tips For Inheritance Tax Planning


From Lee Windle (Chartered Financial Planner) & Steve Roberts (Tax Director) of Armstrong Watson


1. Work out the tax

The first step in any planning has to be to establish the size of the problem. Only then can you begin to think about what solutions might be suitable for you. Start by adding up the value of all of your assets, including your home and personal possessions. If you are worth more than £325000, then Inheritance Tax could be an issue.


2. Consider your options properly

There are many different ways to deal with a potential Inheritance Tax problem. Some involve regulated investment products and some don’t. The wisest course of action is to talk to people who can advise you on both and don’t have a vested interest in pushing you down one particular route.


3. Think about your needs

Don’t just give everything away and hope to live for 7 years. The planning has got to deal with providing for your future as well as that of your family. This means looking at income provision as well as ensuring that you still have somewhere to live!


4. Keep it flexible

Circumstances change. Children will grow up and their needs will change. They will change. New family members might arrive on the scene. You should consider using trusts to give you that flexibility and a degree of control after you have given assets away.


5. Look after the family home

For most people the house they live in is by far their single most valuable asset, but Inheritance Tax planning for the home is difficult. You should certainly not take risks with where you want to live and planning in this area should be very much a matter of last resort.


6. Think cash not income

We all need money to live on and you may have pensions as well as investment income. Affordability should be looked at in the round and sometimes it can make sense to gift income and spend capital. Let the capital growth happen in the hands of the next generation.


7. Make a Will

Seems obvious doesn’t it, but many people don’t have one. As well as setting out who gets what after your death, the Will can also be an important tax planning document if properly drawn up. As well as a solicitor, make sure you consult a tax specialist when you draw up a new Will.


8. Take advantage of special tax breaks

Gifts out of income and business relief on AIM shares are just two of the Inheritance Tax reliefs that might be able to reduce your potential liabilities. Careful use of tax reliefs can make a major difference to your Inheritance Tax position.


9. Look out for other taxes

It is no good doing the right thing for Inheritance Tax if you land yourself with a large Capital Gains Tax bill as a result. The different taxes often interlink so be sure that you look at the whole picture.


10. Don’t leave it too late

None of us know when we are going to die – only that we will. Having said that, the younger you are, the more options you have to plan your affairs sensibly and reasonably reliably. Whatever you do make sure you obtain professional advice.


Lee or Steve can be contacted on 0113 2211300 or by email at: or

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