Keep it in the family – making your money work

  • 19th March 2019

Independent financial advisor Gavin Smart looks at what you can do to secure your hard earned assets.

The last thing that you want is for all your hard earned cash and assets to be lost to Inheritance Tax so it is important to ensure that you consider options to reduce or even eliminate your Inheritance Tax payable. Intergenerational planning helps you put financial measures in place that will benefit your children, and possibly even your future grandchildren, so it’s important to start planning early.

You may want to keep an element of control when passing on your assets. You may want your money to be used for a particular reason, such as paying for school or university fees or for a first property deposit, or you may just want to make sure your money stays within the family. Without appropriate provision, Inheritance Tax (IHT) could become payable on your taxable estate that you leave behind. Your taxable estate is made up of all the assets that you owned, the share of any assets that are jointly owned, and the share of any assets that pass automatically by survivorship. Careful planning can reduce or even eliminate the IHT payable.

IHT is not payable on the first part of the value of your estate – the ‘nil-rate band’. The nil-rate band is currently £325,000. If the total value of your estate does not exceed the nil-rate band, no IHT is payable.

Leave your interest in the family home

Commencing 6 April 2017, an additional ‘residence nil-rate band’ (RNRB) allowance was introduced if you leave your interest in the family home to direct descendants (such as children, step-children and/or grandchildren). This only applies to your main home but can be available even if that home had been sold after July 2016.

The RNRB is being phased in gradually. For the 2018/19 tax year, the maximum additional allowance is £125,000, increasing your total IHT allowance to £450,000 (£900,000 for a married couple). The maximum allowance will rise by £25,000 each tax year until it reaches £175,000 in 2020. This will give you a potential total IHT allowance of £500,000 or £1 million for a married couple. For estates worth more than £2 million, the tax relief is tapered away.

Legitimate reduction of IHT

There are legitimate ways to plan to reduce the amount of IHT you may have to pay. We can advise you on the many ways that you may mitigate any exposure which could include:

  • making a Will
  • making lifetime gifts
  • leaving a proportion to charity
  • setting up a trust
  • making contributions into a pension
  • investing in assets that are IHT free

Whatever your plans are for later life, make sure you review your financial position and put plans into place to ensure that your assets are protected for the future. Contact Gavin today to discuss your plans and objectives.

Forrester Boyd Wealth Management Limited is authorised and regulated by the Financial Conduct Authority. The Financial Conduct Authority does not regulate advice on Trusts, Taxation or Will writing Services.


Any news or resources within this section should not be relied upon with regards to figures or data referred to as legislative and policy changes may have occurred.

Information contained within this article is not a personal recommendation of Forrester Boyd Wealth Management. The wording in this article is not to be construed as an offer or advice. We recommend you seek advice concerning suitability from your investment adviser.