As the saying goes, “in this world nothing can be certain, except death and taxes.” We can’t do anything about the former, but we can help you when it comes to your tax affairs, using sound financial planning, particularly Inheritance Tax planning.

Many people are going to have an Inheritance Tax (IHT) problem unless they take steps to address this.  Our clients tell us that they want their money to help their families.  They don’t want their children or other beneficiaries to hand over 40% of their taxable inheritance to the Inland Revenue.

Currently the threshold for IHT is £325,000.  Anything over this threshold is taxable at 40%. 

There are many things you can do to make sure you don’t leave an IHT problem for your family when you die. One of these is to take out a life insurance policy that provides a sum of money to pay part or all of the IHT bill.  For a married couple you could consider setting up a policy that pays out on the death of the last survivor, because this is when the IHT bill would have to be paid.

Let’s look at an example.  A married couple aged 65, who have a £200,000 IHT liability.  If they take out a life insurance policy for this sum, it would be available at a monthly cost of £358.28*.  On the face of it, this looks expensive.  But, this 65 year-old couple would have to live to the age 111 before the premiums they’ve paid exceed the IHT bill on death.

Quote based upon male and female married couple who are both aged 65, non-smokers, are fit and healthy and have no historic medical conditions.

Now this is where we tell you why you need professional financial advice.  A life insurance policy such as this, would need to be written under a suitable trust arrangement.  Otherwise, just like all your other money and assets, the insurance pay-out would also be liable for Inheritance Tax.

Tax Planning and Inheritance Tax Planning is not regulated by the FCA.

Tax treatment varies according to individual circumstances and is subject to change.

Trusts is not regulated by the Financial Conduct Authority.

Our offices are in Shenstone Wood End near Lichfield, but we work with clients throughout the region. 

We would welcome the opportunity to talk to you about Inheritance Tax Planning and any other aspect of financial planning. We can meet with you at home or for business clients at your premises. Please contact our Client Liaison Team on 01543 401029 for more information or to make an appointment with one of our Financial Advisers.

Source: Iress Comparison Report Whole Of Life 20.09.19

Photo: Alan Woolford Financial Advisor.