Strategies to minimise inheritance tax

You’ve worked hard to accumulate your wealth, you want to pass on as much as possible to your loved ones.

Though there are no quick fixes, here are some of the various strategies we combine to help our clients control their assets, manage their investment risk and return and, ultimately, minimise or erase altogether their inheritance tax burden.

‘Double Dipping’ Business Property Relief (BPR)

This is particularly useful in family situations.

Qualifying BPR assets automatically sit outside of an estate for IHT once it has been owned for two years and the owner can still have full access during their lifetime.

In some cases, it may be possible for BPR to be utilised for a second time in respect of the same business property by the surviving spouse.

Gifts out of normal expenditure exemption

This can be used to share your wealth during your lifetime through regular gifting out of surplus income.

There are important rules that apply but it can be an effective way to reduce your estate whilst gifting loved ones.

Use of trusts

Historically the most common approach, trusts are still efficient and can be structured in different ways with income being available.

Pension contributions for others

This has significant potential benefits: the size of the estate of the donor reduces whilst providing pension provision for someone else.

The contributions are treated as having been made by members for income tax purposes, helping reduce the tax bill.

This is especially helpful where it affects high income child benefit charges.

Insurance policies written into trust

Utilising a trust avoids proceeds of policies being liable to IHT while making funds immediately available without waiting for a Grant of Probate.