Inheritance Tax IHT

For Resident and non-resident Individuals / Trustees

Inheritance Tax (IHT) is charged at:

20% on lifetime chargeable transfers.
40% on transfers made at death.

IHT becomes due if you transfer or gift property to trusts or individuals above the nil-rate band of £325,000 or when a transfer is not classified as a Potentially Exempt Transfer (PET). In some cases, IHT is payable both when property enters and leaves a trust.

Efficient Inheritance Tax Planning:
Early planning can significantly reduce or even eliminate IHT liability. For example, if property is transferred at least seven years before the donor's death, it may escape IHT entirely. Because IHT and Capital Gains Tax (CGT) are interconnected, expert advice is essential for tax-efficient planning.

At Groopacc Taxation, our qualified and experienced partners provide tailored advice on reducing IHT liabilities, ensuring your loved ones benefit fully from your hard-earned assets.

Strategies to Minimize Inheritance Tax

Our team advises clients on five key strategies to reduce their Inheritance Tax liabilities:

1. Gifting to Your Partner:

Transferring assets to your spouse or civil partner can help avoid IHT on the value of the gift.
Gifts to spouses or civil partners who are permanent residents of the UK are exempt from IHT.

Different rules may apply if the recipient’s permanent home is outside the UK.

2. Gifting to Family or Friends:

Making gifts to family members or friends can be a wise tax-planning decision, provided there is no expectation of benefit in return.
Gifts remain part of your estate for seven years but may qualify for taper relief over time.
You can give up to £3,000 annually tax-free or make gifts for specific occasions, such as a child’s or grandchild’s wedding.

3. Establishing a Trust:

Assets placed in a trust—such as cash, property, or investments—are removed from your estate, reducing IHT liability.
Trusts can be used for purposes like funding grandchildren's education or supporting a family member with a disability.
Trusts can be established during your lifetime or through your will.
Some trusts may have their own IHT obligations, which require careful planning.

Groopacc Taxation’s experts will help you navigate complex trust rules and advise on the most tax-efficient approach.

4. Leaving Assets to Charity:

Donations to registered charities are exempt from IHT and can reduce your overall tax liability.
If 10% of your estate is left to charity, the IHT rate on the remaining estate reduces from 40% to 36%.
This strategy benefits both your family and a charitable cause.

5. Using Life Insurance:

While life insurance does not directly reduce IHT, it can provide funds to help your surviving family pay the IHT bill.
For optimal results, the life insurance policy should be placed in a trust to prevent it from increasing the value of your taxable estate.
Groopacc Taxation’s experts guide clients on structuring life insurance policies to maximize their benefits while minimizing additional tax liabilities.

Why Choose Groopacc Taxation ?

At Groopacc Taxation, we specialize in creating tax-efficient strategies tailored to your needs. Our team stays updated on the latest legislation to provide reliable advice. With our help, you can minimize IHT liabilities, ensure compliance, and preserve more wealth for your loved ones. Contact us today to discuss how we can assist with your inheritance tax planning

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