With current property price levels, more and more families are realising that they have a substantial liability to Inheritance Tax looming unless planning is put in place to mitigate this.

There are various ways to compliantly reduce the value of an Estate for Inheritance Tax (IHT) purposes and by careful use of these, the burden of Inheritance Tax can be mitigated to a considerable extent and sometimes eliminated completely.

IHT planning can include:

1. Reduced Inheritance Tax Liability: Effective IHT planning can help reduce the overall IHT liability on your estate, ensuring that more of your wealth is passed on to your beneficiaries.
2. Use of Tax-Free Allowances: IHT planning can make use of tax-free allowances, such as the nil-rate band and residence nil-rate band, to shield a portion of your estate from IHT.
3. Lifetime Gifting: IHT planning can help structure lifetime gifts in a tax-efficient manner, taking advantage of exemptions and potentially reducing the taxable value of your estate.
4. Business Property Relief (BPR): For business owners, IHT planning can explore the use of BPR, which can provide relief from IHT on certain business assets and shares.
5. Agricultural Property Relief (APR): Similar to BPR, APR can offer relief from IHT on agricultural property and land, making it a valuable tool for estate planning.
6. Gifts with Reservation of Benefit (GROB) Avoidance: IHT planning can help ensure that gifts made during your lifetime do not fall under the GROB rules, which could otherwise bring them back into your estate for IHT purposes.
7. Charitable Donations: IHT planning can include charitable giving, which is often exempt from IHT. Donations to qualifying charities can reduce your estate's taxable value.
8. Trusts: IHT planning may involve the creation of trusts, which can provide control over your assets while removing them from your estate for IHT purposes.
9. Debt Deductions: IHT planning can account for any outstanding debts and liabilities, which can reduce the taxable value of your estate.
10. Use of Annual Gifting Allowances: IHT planning can take advantage of annual gifting allowances, such as the annual exemption and small gifts exemption, for tax-efficient giving.
11. Exempt Beneficiaries: Planning can identify exempt beneficiaries, such as spouses, civil partners, and charities, who are often not subject to IHT.
12. Residential Nil-Rate Band (RNRB): IHT planning can explore the RNRB, which provides an additional allowance for passing on a main residence to direct descendants, potentially reducing IHT.

It's important to note that IHT planning should be tailored to your specific circumstances and goals, and it should be carried out in compliance with current tax laws and regulations. Consulting with our qualified financial advisors is crucial to ensuring that you take full advantage of these tax benefits while safeguarding your financial future.

At Gritstone, we are ideally placed to provide a balanced, structured Inheritance Tax plan to meet a family’s needs on a long-term basis and to protect wealth down the generations.