End of year tax planning
- AuthorRichard Stone
At Talbots Law we recommend that you regularly review your Will and Estate Planning to ensure that they are up-to-date. As we near the end of the financial year, Richard Stone, Talbots Law Trust & Estates Solicitor specialising in wealth planning, looks at the reasons why it’s a particularly good time to do so, in order that you can make sure you take advantage of any unused 2017 / 2018 tax allowances.
Richard looks at five things for you to think about to make your wealth work best for you and your family before the end of the tax-year.
- Do you need to update your Will?
Planning opportunities exist which you may not have previously considered. This may be to provide for long term care or to pass assets tax-efficiently to the next generation. Recent changes to the rules regarding the taxation of estates mean that existing wills should be reviewed to make sure your loved ones don’t end-up paying more tax than necessary on your death.
- Have you thought about writing your life insurance policies under trust?
Specifying that you want your life insurance policy proceeds to be paid to a trust rather than your estate means the policy proceeds won't be subject to inheritance tax on your death. If you put this in a letter of wishes, make sure it doesn't conflict with your will.
- Are you using all your exemptions and reliefs for inheritance tax?
You may be able to restructure your estate to reduce the inheritance tax payable on your death, using the various exclusions, exemptions and reliefs. As the end of the tax year approaches, it's worth thinking about using your £3,000 annual exemption for gifts, if you haven't already done so. It's also a good time to update your records of gifts you've made.
- Are you using ‘normal expenditure out of income exemption’?
This is an effective way of reducing inheritance tax if your income is greater than your outgoings, so it's worth making the best use of it. As long as you meet the exemption conditions, the lifetime gifts you make will be exempt from inheritance tax, and there's no limit on the gift amounts.
- Will your estate qualify for the recently introduced residence nil rate band?
On 6th April 2017, an additional residence-nil-rate-band was introduced, reducing the inheritance tax payable when you leave your family home to your descendants. The terms of your will, the size of your estate and how your estate is structured will affect your ability to claim the relief. The amount of relief will increase for the next tax-year; it is worth reviewing your circumstances to ensure that you don’t lose this valuable relief.
At Talbots Law we offer a comprehensive will review service to ensure that our clients have the appropriate will and planning in place. If you have you have any questions about reviewing your existing will please get in touch on 0800 118 1500.