Inheritance Tax and Trusts

Inheritance tax (IHT) was introduced in 1986 to replace capital transfer tax which had been in force since 1975 as a successor to estate duty.
IHT is a tax paid on the value of your estate over the nil rate band when you die.

In the tax year 2007/08 the UK Government collected over £3.8 billion in inheritance tax. A summary of UK Government tax receipts can be found at www.hmrc.gov.uk/stats/tax_receipts/table1-2.pdf

The nil rate band is normally increased on the 6th April each year and for tax year 2009/10 it is £325,000. Once your estate exceeds this figure IHT is payable at a rate of 40%.

Example: Mr A dies leaving an estate valued at £1,000,000 in equal proportion to his 3 children.

The amount of IHT payable would be:
£1,000,000 - £325,000 x 40% = £270,000.

Solutions to IHT
We will work with you and, where appropriate, your legal and tax advisers to help you reduce the potential IHT liability on your estate and leave more of your estate to your intended beneficiaries.

There are some basic steps that most people can consider to reduce the IHT liability on their estate:

• Ensure your will is tax-efficient (see our Wills page)
• Make use of the annual IHT exemptions.
• Make lifetime gifts.
• Transfer assets to a trust.
• Place life assurance policies and pension plans in trust where appropriate.
• Fund a life assurance policy written in trust to provide funds to meet the IHT liability.

Please contact us for help with reducing your inheritance tax liability or continue through our website.

Further details about IHT can be found on the Government website - www.direct.gov.uk

Amber Wealth Creation Ltd is authorised and regulated by the Financial Services Authority. FSA Registration No: 401162.
Please note that the Financial Services Authority does not regulate taxation and trust advice, wills, bank deposits, national savings and some forms of buy to let mortgages and commercial mortgages.
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