My annual review of my finances with David Jones was, as always, a pleasure. David always answers my questions clearly and reassures me with the knowledge he has. I enjoyed our meeting and greatly appreciated his gentle manner and demeanour. I would highly recommend David Jones to other people.
In the event of your death, the rules on inheritance tax can end up costing your loved ones much more than you may anticipate, without specialist planning. Inheritance tax may be due on the transfer of assets that you may have built up during your lifetime in the event of your death.
In normal circumstances, if the value of your estate is below £325,000, or everything above the threshold is left to your spouse or a charity, there will be no tax to be paid.
However, if the value of your estate is above the threshold, then those assets will be subject to inheritance tax at 40%. In order to maximise your legacy as much as possible, inheritance tax planning is vital.
There are many approaches to Inheritance Tax planning, such as gifting assets into Trust (of which there are many different types) or gifting to individuals during your lifetime.
Alternatively, there are investment options that can reduce a potential Inheritance Tax liability such as Enterprise Investment Schemes, or other investments that may qualify for Business Property Relief; portfolios of Alternative Investment Market shares for example.
The Inheritance Tax planning strategy that is right for you, will very much depend on your personal circumstances and objectives, and with often interplay with your pension and investment planning.
Why is Inheritance Tax Planning important?
At KLO Financial Services, we understand that thinking about your mortality or that of your loved ones can be a difficult subject.
However, with early preparation and planning, you can get peace of mind knowing that your chosen beneficiaries will receive as much of what you leave behind as possible.
The threshold value for inheritance tax is still less than the value of many family homes. This means that without proper planning, the executors of your Will may be forced to sell assets such as the family home in order to pay the bill.
However, with thoughtful planning you can minimise any Inheritance Tax liability. In many cases, you can eradicate it completely.
What can KLO Financial Services help me with?
Our experienced financial planners specialise in providing estate planning solutions, so working with us means that you can rest easy knowing your loved ones are protected from financial insecurity in the event of your death.
We do this with close relationships with solicitors who specialise in Wills and Probate matters, as well as Inheritance Tax law and Trust formation. These relationships are vital in providing the best client outcomes.
For more information, please read our blog on ways to reduce inheritance tax.
We are always eager and available to meet with you to discuss your financial objectives and assess your current strategies. No question is too big or too small. The first consultation is always free and comes with no obligation. If you’d like to speak to one of our expert financial advisers, get in touch today.
Our Inheritance Tax advisers understand that every person and family has a unique financial situation. You will require a solution that is tailored to you. At KLO Financial Services, we will listen to you in order to get an accurate picture of any potential liabilities.
Our inheritance tax advisers are always developing and constantly keeping up to date with current Inheritance Tax regulation. This means that our financial advisers can provide solutions that take into account the ever-changing regulatory environment.
After careful analysis, we will present the inheritance tax planning options available to you and listen carefully to your feedback. We want to make sure that you understand and are comfortable with our recommendations.
Increased Financial Protection
One of the primary benefits to inheritance tax planning is the increased financial protection for your family. After working for your own financial success, reducing your inheritance tax liability passes more of your estate onto the loved ones you leave behind.
Another benefit to effective inheritance tax planning is that you can live without worry as you know that if anything were to happen to you, your wishes will be seamlessly carried out. You can know that those around you will not have the worry of financial burden arising in the event of your death.
Improved Financial Understanding
Our inheritance tax planners will help to educate you on ever changing laws and regulations, as well as how certain inheritance tax planning strategies would be beneficial to you, given your specific circumstances. By deepening your financial understanding, you will find it easier to measure your estate planning goals and make financial decisions both now and in the future.
Increased Legal Protection
By using KLO Financial Services, you can rest assured knowing that all our independent financial planners are fully qualified and closely regulated. We work closely with equally qualified solicitors and tax advisers, to ensure the best outcome for out clients and their beneficiaries.
Using an inheritance tax planner takes away the stress of having to do large amounts of research, or time-consuming paperwork, as we do all of this for you. All our planners are experts within the changing landscape of financial services, ensuring that we find the best solution for you and your estate, with a much, or as a little, involvement from you as you wish.
There is often the misconception that only the very wealthy are affected by the inheritance tax. This, however, is incorrect. Increasing estate valuations mean that many people could be affected by inheritance tax without realising. From 2020, the new £1 million inheritance tax threshold only applies to married couples or civil partners that intend for blood relatives to inherit the family home. If you are single or divorced, the amount is halved.
The current threshold is £325,000 for an individual and £650,000 for a married couple or civil partners. If you are widowed, the threshold may be £650,000 depending on how much of the allowance was used when your partner passed way. This increases to £1 million with the Additional Residential Nil-Rate Band.
The simple answer is yes. Provisions introduced by the Finance Act in 2008 mean that survivors of a marriage or civil partnership have been able to claim their spouse’s unused nil-rate band on their death. The only factor that may affect this is how much of the available nil-rate band has been utilised.
If you avoid making inheritance tax plans, your options could potentially be reduced, and costs could be increased. For example, a gift made to a beneficiary could potentially reduce your inheritance tax bill, but you must survive a minimum of seven years after for this to take full effect. If you die within this period, the inheritance tax liability still exists.
There are a few gifts you can give that are automatically exempt from inheritance tax. This includes any transfers between married couples or civil partners, UK registered charities, qualifying political parties and various national institutions.
There are also gifts exempt from inheritance tax, which includes small gifts up to the value of £250 in any one tax year. This can be given to as many people as you wish. As well as this, another amount of £3000 is annually exempt each tax year, which can be carried over to the following tax year. An exempt gift can also be given for a wedding – up to £5000 to a child and £2500 to a grandchild or great grandchild and £1000 to anyone else.
Upon your death, the executor of your Will must settle any Inheritance Tax liability. Only once the bill has been settled will assets be distributed to your beneficiaries.
James has been my financial adviser for several years now, and I am continually impressed by his customer care, knowledge of the market, and attention to detail. During our regular face to face meetings, my finances are discussed and reviewed in a clear and practical way. If I have any questions, James is always on hand with easy to understand advice. And every decision we make together is promptly followed up. I can’t recommend James and KLO Financial Services highly enough. They are a company who genuinely care about their clients, and I feel comforted to know my finances are in such safe hands.
I couldn’t be more pleased to have James Glavey at KLO as my financial adviser. He is doing really good things with my portfolio, but above all I trust him to do so and this is paramount for me.
Dan has been ultra professional , explaining all my options in a straightforward way and his customer service and that of KLO has been first rate .
I would highly recommend Dan and the team at KLO.