Inheritance Tax

Inheritance Tax

Understanding inheritance tax (IHT) and estate planning is crucial. This section offers insights into IHT, capital gains tax, civil partnerships, and strategies for effective planning.

The value of investments and any income from them can fall as well as rise and you may not get back the original amount invested.

HM Revenue and Customs practice and the law relating to taxation are complex and subject to individual circumstances and changes which cannot be foreseen.

Capital Gains Tax (CGT)

Capital Gains Tax (CGT) plays a significant role in estate planning, particularly when considering the disposal of assets and investments. Here are some essential points to consider:

Annual Exemption: Individuals are entitled to an annual CGT exemption of £6,000, while trustees have an exemption of up to £3,000.
Utilising Exemptions: Consider utilising your CGT exemption by reinvesting in tax-efficient vehicles such as ISAs or transferring assets between spouses/civil partners before encashment to maximise relief.
Offsetting Losses: Assess whether any investments have made a loss and if excess gains could be offset by any losses, which can be carried forward indefinitely.

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Civil Partnerships

Civil partnerships offer couples similar rights and responsibilities to marriage, impacting various aspects of financial planning. Here are key considerations for civil partnerships:

Registration Process: Civil partnerships must be registered in the presence of a registrar and require an announcement at least 28 days prior to registration.
Legal Protections: Civil partnerships provide legal protections equivalent to marriage, affecting areas such as inheritance, tax planning, and property rights.
Impact on Wills: Civil partnership registration revokes existing wills under certain jurisdictions, necessitating a review of estate planning documents.

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Understanding the latest regulations and planning strategies for inheritance tax is essential for preserving wealth and minimising tax liabilities. Here are key insights into inheritance tax planning:

Residence Nil Rate Band: The introduction of the residence nil rate band provides additional exemptions for qualifying properties passed on to children or grandchildren.
Annual Gift Exemption: Individuals can make gifts up to £3,000 annually without incurring inheritance tax, with unused allowances carrying forward for one year.
Potentially Exempt Transfers (PETs): Unlimited gifts can be made as PETs, provided the individual lives for seven years after the gift is made.

It’s essential to stay informed about the latest developments in inheritance tax legislation and seek professional advice to develop a tailored estate planning strategy that meets your specific needs and objectives.

Inheritance Tax

Capital Gains Tax (CGT)

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Civil Partnerships

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Inheritance Tax

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