Passing on: a bit of clarity on inheritance tax

A As a silent beneficiary to your estate, HM Treasury probably isn’t listed as one of your intended beneficiaries.

It might seem as though Inheritance Tax (IHT) is for the wealthiest in our society – we hear a lot about those with the “broadest shoulders” – but increasingly we are discovering that this isn’t quite the case.

There are various factors at play, and it is important to look at your own case in isolation. However, broadly speaking, most married couples will be able to pass on £1 million to following generations before incurring IHT.

A million may sounds like a lot, but with the average value of an Edinburgh detached home being £678,000 that silent beneficiary may not be far away for many.

This goes some way too to explaining why the amount of IHT paid in Scotland’s capital is expected to have doubled next year, when compared with the 2015/16 tax year.

When we leave this mortal coil, many of us hope to pass on the wealth we have accumulated over the course of our lifetimes to our loved ones, or to deserving charitable causes that matter most to us.

It’s less about when we pass on our wealth, and more about being deliberate about where it ultimately goes.

You may want to help out financially for your children, nieces, nephews, or grandchildren during your lifetime to help them get on in their early adulthood. Then you will get to see the material benefits your money can provide them.

Some key questions clients ask us at Acumen are: “do I have a potential liability to IHT, now or in the future? How significant might it be? And do I have genuine surplus capital – money beyond what I’ll need to support myself in the long term?”

These are simple questions, but not always easy to answer.

As a chartered financial planner, I help my clients to make informed choices about the timing and level of gifts they want to make in their lifetime. I take time to understand their circumstances and – more importantly – their aims and aspirations.

Attending our Ready, Set, Inherit seminar at The Bonham Hotel in Edinburgh on Wednesday, 3 December could help you understand the landscape surrounding IHT and start to make plans.

It might mean you make gifts to your loved ones now, or it could mean you are able to establish what they may inherit from you even after tax has been paid, which could be more than a sufficient legacy.

Importantly, it could help you to make informed, confident choices.

Find out more here