Inheritance tax, one of life's unpleasant facts

Reducing the size of your estate through increased spending or gifting

Inheritance tax (IHT) is generally payable upon death and during the life of someone where they give away assets. IHT can be reduced significantly by tax planning in advance.

Everyone is entitled to an IHT-free allowance of £325,000 in the current 2012/13 tax year. A married couple or registered civil partnership would therefore generally have no IHT to pay if their estate on second death is less than £650,000. The IHT allowance threshold which has been frozen at £325,000 since 2009 is set to increase to £329,000 in 2015/16.

While net estate values might be less than £650,000 now because of a mortgage or some other liability or loan, it is possible that at the time of death the estate will be worth much more as debt is being paid off. Over the IHT tax-free allowance band, IHT is paid at 40 per cent and so it is a significant tax charge levied on your assets.

Reducing a potential IHT bill
IHT needs to be considered by everyone. These are some areas you may wish to discuss with us to mitigate a potential IHT bill:

  • Giving allowable amounts of money regularly to your children or others each year out of income
  • Passing wealth down to the next generation seven years before death
  • Using family trusts to hold capital
  • Making sure your business qualifies for full IHT relief
  • Swapping certain assets that attract IHT to assets that can be free of IHT after two years
  • Giving to charity
  • Making sure your wills are drafted properly
  • Making sure your holiday letting meets the trading tests

Don’t leave your family with a tax bill
If you have significant wealth you need to consider IHT at an early stage. To discuss the options available to you, please contact us.

The Financial Services Authority does not regulate estate planning, wills or trusts.


LMJ Financial Management Ltd is authorised and regulated by the Financial Conduct Authority to provide investment advice and is bound by its rules.

The material on the site is the copyright material of LMJ Financial Management Ltd. You may not copy, reproduce, republish, disassemble, decompile, reverse engineer, download, post, broadcast,transmit,make available to the public, or otherwise use LMJ Financial Management Ltd's content in any way except for your own personal, non-commercial use. This includes, but is not limited to all individual fund manager data such as rankings or fund managers and ratings of fund managers. LMJ Financial Management Ltd does not accept any liability for your reliance upon, or any errors or omissions. Any other use of LMJ Financial Management's content requires the prior written permission of LMJ Financial Management Ltd.

LMJ Financial Management Ltd, Upper South Hall, Bullen Farm Business Centre, Bullen Lane, East Peckham, Tonbridge, Kent, TN12 5LX
Tel: 01732 874111 Fax: 01732 874222 Email:

©2013 LMJ Financial Management 2013.
Cookie Policy
l Privacy Policy l Disclaimer


HTML5 Powered with CSS3 / Styling, and Semantics