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Passing on Your Wealth, Not Your Tax Bill
Passing on Your Wealth, Not Your Tax Bill
Inheritance Tax is sometimes called a "voluntary tax."
With the right planning, you can significantly reduce—or even eliminate—the amount you pay.
This is for information purposes only and does not constitute advice.
It is recommended that you seek professional advice before making and decisions.
The "Stealth" Tax on Homeowners
Inheritance Tax (IHT) used to be a concern only for the very wealthy. That has changed. While property prices have soared over the last decade, the tax-free allowance has remained frozen.
This means many families who simply own a nice home and have modest savings are now being dragged into the tax net.
The Good News: IHT is one of the most manageable taxes. The government provides legal allowances and exemptions that, if used correctly, ensure your hard-earned money goes to your loved ones, not the taxman.
The "Magic Numbers": What can you pass on tax-free?
The rules can be complex, but for most people, it comes down to three key numbers:
£325,000 (The Standard Allowance): Everyone has a "Nil Rate Band" of £325,000. You pay 0% tax on the first £325k of your estate.
+ £175,000 (The Home Allowance): If you leave your main family home to your direct descendants (children or grandchildren), you get an extra "Residence Nil Rate Band" of £175,000.
Total per person = £500,000 tax-free.
x 2 (The Married Couple Allowance): Married couples and civil partners can transfer any unused allowance to each other.
Total per couple = £1 Million tax-free.
Note: These allowances can be reduced for estates worth over £2 million.
1. Making a Will
1. Making a Will
Don't leave it to chance. If you die without a Will (Intestacy), the law decides who gets your money—not you. This often means unmarried partners or step-children receive nothing. A Will is the cornerstone of planning; it ensures your exact wishes are followed. (Note: The Financial Conduct Authority does not regulate Will Writing.)
2. Power of Attorney (LPA)
2. Power of Attorney (LPA)
Plan for while you are still here. An LPA is just as important as a Will. It appoints someone you trust to make decisions about your finances or health if you lose the mental capacity to do so yourself. Without one, your family may face a long, expensive court battle just to pay your bills.
3. Smart Gifting & Trusts
3. Smart Gifting & Trusts
The "7-Year Rule". You can give gifts to your family while you are alive to reduce your estate size. Typically, if you survive for 7 years after making the gift, it becomes completely tax-free. We can also help you use Trusts to pass money on safely (e.g., to children too young to manage it themselves). (Note: The Financial Conduct Authority does not regulate Trusts.)
How ARM Associates Helps
Dealing with the death of a loved one is emotional enough without having to wrestle with HMRC or the Probate courts.
We provide straightforward advice to help you structure your affairs now, so your family faces less stress later. Whether it is calculating your potential liability, setting up tax-efficient gifts, or simply helping with the paperwork of Probate, we are here to guide you.
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