Legacy & Estate Planning in Plymouth

Planning for the seamless transfer of your family’s property and real estate assets requires a thoughtful and strategic approach. As the custodian of these assets during your lifetime, it’s essential to ensure that they are passed on to your children and loved ones in a tax-efficient manner after your death.

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Legacy Partners provides comprehensive legacy planning services to ensure the efficient transfer of wealth to future generations.

Inheritance Tax Planning

We specialise in Inheritance Tax Planning, offering expert strategies to reduce the inheritance tax your estate may owe. Our aim is to help you preserve more of your wealth for your beneficiaries by employing tailored planning techniques and allowances. By expertly navigating the complexities of inheritance tax laws, we protect your legacy, ensuring you can pass on more of what you have worked hard to build.

Without proper planning, a significant portion of your estate could be lost to taxes.

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What is the Inheritance Tax threshold?

The Inheritance Tax (IHT) threshold refers to the amount up to which an estate is not subject to Inheritance Tax when someone passes away. In the UK, this threshold is commonly known as the “nil-rate band.”

As of the 2023/2024 tax year, the nil-rate band is set at £325,000. This means that if the total value of an estate is below £325,000, no Inheritance Tax is due. If the estate exceeds this amount, Inheritance Tax is charged at 40% on the value that surpasses the threshold.

Additionally, there is an extra allowance called the Residence Nil Rate Band (RNRB) if a home is passed on to direct descendants, which can further increase the tax-free threshold. The RNRB is £175,000 for the 2023/2024 tax year.

Therefore, in certain circumstances, a combined threshold of up to £500,000 can apply, or even more if unused allowances from a deceased spouse or civil partner are transferred.

What is the Inheritance Tax nil-rate band?

The Inheritance Tax (IHT) nil-rate band is the amount of an individual’s estate that is not subject to Inheritance Tax when they pass away. In the UK, as of the 2023/2024 tax year, the nil-rate band is £325,000. This means that if the value of an estate is below this threshold, no Inheritance Tax is due.

If the estate is worth more than £325,000, Inheritance Tax is charged at 40% on the amount above this threshold. There are also additional allowances, such as the Residence Nil Rate Band, which can further increase the amount that can be passed on tax-free, especially if a home is left to direct descendants.

The nil-rate band can be transferred between spouses or civil partners, allowing the surviving partner to use both their own nil-rate band and the one from their deceased partner, potentially doubling the amount that can be passed on tax-free.

How much is Inheritance Tax?

Inheritance Tax (IHT) is charged on the estate of someone who has died, including their property, money, and possessions. As of the latest update, the standard rate of Inheritance Tax is 40% on the value of an estate above the threshold.

The threshold, known as the “nil rate band,” is £325,000. This means that if an estate is worth more than £325,000, the amount over this threshold is taxed at 40%.

There are also additional allowances that may apply, such as the “residence nil rate band” (RNRB), which can increase the amount that can be passed on tax-free if the estate includes a home that is left to direct descendants. For the 2024/2025 tax year, the RNRB is £175,000.

It’s also worth noting that there are various reliefs and exemptions that might apply, depending on the circumstances of the estate.

The breakdown of Inheritance Tax (IHT) payable on different estate values, assuming the full Residence Nil Rate Band (RNRB) of £175,000 is claimed, compared to when no RNRB is applicable:

£325,000: The estate value is below the combined threshold of £325,000 + £175,000 (total £500,000), so no IHT is payable.

£400,000: With RNRB, the threshold is £500,000. The taxable amount is £400,000 – £500,000 = £0, so no IHT is payable. Without RNRB, the threshold is £325,000, so £400,000 – £325,000 = £75,000 taxed at 40% = £30,000.

£500,000: With RNRB, the threshold is £500,000. The taxable amount is £500,000 – £500,000 = £0, so no IHT is payable. Without RNRB, the threshold is £325,000, so £500,000 – £325,000 = £175,000 taxed at 40% = £70,000.

£600,000: With RNRB, the threshold is £500,000. The taxable amount is £600,000 – £500,000 = £100,000 taxed at 40% = £40,000. Without RNRB, the threshold is £325,000, so £600,000 – £325,000 = £275,000 taxed at 40% = £110,000.

£800,000: With RNRB, the threshold is £500,000. The taxable amount is £800,000 – £500,000 = £300,000 taxed at 40% = £120,000. Without RNRB, the threshold is £325,000, so £800,000 – £325,000 = £475,000 taxed at 40% = £190,000.

£1,000,000: With RNRB, the threshold is £500,000. The taxable amount is £1,000,000 – £500,000 = £500,000 taxed at 40% = £200,000. Without RNRB, the threshold is £325,000, so £1,000,000 – £325,000 = £675,000 taxed at 40% = £270,000.

Who is liable for Inheritance Tax payments?

Inheritance Tax (IHT) is generally paid by the estate of the deceased person. This means that the responsibility for paying IHT falls on the estate itself before any assets are distributed to the beneficiaries.

How it works:

Estate Responsibility: The executors or administrators of the estate are responsible for calculating and paying IHT. This is usually done from the funds within the estate before distributing the remaining assets to the heirs.
Payment Process: IHT is paid to HM Revenue and Customs (HMRC). The tax must be paid within six months of the end of the month in which the person died. If it’s not paid within this time, interest may be charged.
Inheritance Distribution: Once the IHT is settled, the remaining assets of the estate can be distributed to the beneficiaries according to the terms of the will or the intestacy rules if there is no will.
Beneficiaries’ Responsibility: While beneficiaries do not typically pay IHT directly, they may be affected by the amount of tax due, as it reduces the overall value of the inheritance they receive.

When does Inheritance Tax have to be paid?

Inheritance Tax (IHT) is due to be paid within a specific time frame after someone’s death. Here’s a summary of the payment schedule:

Payment Deadline: IHT must be paid within six months of the end of the month in which the person died. For example, if someone died on June 15th, IHT must be paid by December 31st.
Interest on Late Payments: If the IHT is not paid by the deadline, interest will be charged on the overdue amount. The interest is calculated from the end of the six-month period until the date the tax is paid.
Initial Payment: If the full amount of IHT cannot be paid within the six months, an initial payment based on an estimated amount must be made to avoid interest charges. The final amount can be adjusted later when the exact value of the estate is determined.
Using Estate Funds: Typically, IHT is paid out of the estate’s funds before any assets are distributed to the beneficiaries.

Property Tax Planning

Solutions are provided to minimise taxes on property holdings, which can include primary residences, investment properties, and other real estate, ensuring tax efficiency in property ownership and transfers.

Property tax planning is an essential part of financial management, particularly for property owners and investors. It involves devising strategies to manage and reduce property tax liabilities legally and efficiently. Given the complexities of property tax laws, which can vary significantly between regions, understanding and implementing effective tax planning can result in considerable savings. This process includes reviewing current property valuations, identifying potential exemptions or reliefs, and exploring opportunities for tax deferral.

Tax Efficient Wills

Legacy Partners designs wills that are carefully crafted to minimise the tax burden on your estate, ensuring that a greater portion of your wealth is passed on to your heirs by utilising legal tax-saving mechanisms and strategies.

Creating a tax-efficient will is a vital aspect of estate planning, ensuring that your wealth is preserved and passed on to your heirs with minimal tax liability. By carefully structuring your will, you can take advantage of legal tax-saving strategies, reducing the impact of inheritance tax and other potential taxes on your estate. A tax-efficient will not only protects the value of your assets but also provides peace of mind, knowing that your loved ones will benefit from your legacy to the fullest extent possible.

Digital Estate Planning

Legacy Partners offers services to manage and secure digital assets, including social media accounts, online banking, and digital files, ensuring they are properly handled and transferred.

As more of our daily activities migrate online, the concept of digital assets has expanded. Digital assets encompass everything from social media profiles, where personal and professional identities are shaped, to online banking accounts, where financial transactions are conducted. These assets also include digital files such as photos, videos, documents, and more. While these assets bring convenience and connectivity, they also introduce challenges, especially regarding their management and security.

Many individuals and businesses are unprepared for the complexities involved in managing digital assets, particularly in times of crisis or transition, such as illness, death, or business restructuring. Without proper management, these assets can become vulnerable to unauthorised access, loss, or misuse.

What’s the process?

Trust. Plan. Deliver.

You tell us your best outcome and we’ll aim to deliver it, tax-efficiently. That’s the key to maintaining your legacy intact. It’s not about a comfy relationship with existing advisors, who can’t afford to lose you, which likely compromises advice. For effective legacy planning you need a faster horse!

For each of us, our time will expire, but our legacy doesn’t have to..

What our clients say

In almost twenty years of working for us they have acted with honesty and integrity as one of our trusted advisers. We are always treated as important and nothing is too much trouble

John Reilly, Managing Director

John Reilly (Civil Engineering) Ltd

In almost twenty years of working for us they have acted with honesty and integrity as one of our trusted advisers. We are always treated as important and nothing is too much trouble

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