Navigating HMRC’s Rules to Safeguard Your Assets for Future Generations.

Inheritance can be a generous gift to your heirs, but without the right planning, a significant portion might end up as Inheritance Tax (IHT). At Clearcut Accounting, we understand the complexities of HMRC’s rules and are dedicated to helping you minimize the tax burden on your estate, ensuring your loved ones receive the maximum benefit.

Understanding IHT Thresholds

Overview: As of our last update, the IHT threshold (or ‘nil rate band’) stands at £325,000. This means that if the value of your estate exceeds this figure, anything above this threshold may be taxed at 40%.

Residence Nil-Rate Band (RNRB): An additional allowance (currently at £175,000) is available when your main residence is passed on to direct descendants.

Making Use of Allowances

Overview: HMRC provides several allowances and exemptions that can help reduce the IHT due on your estate.

Annual Gift Allowance: You can give away £3,000 worth of gifts each tax year without them being added to the value of your estate. Any unused portion of this allowance can be carried forward one year.

Wedding Gifts: Exemptions are available for gifts to individuals getting married, ranging from £1,000 for any individual, £2,500 for grandchildren, and £5,000 for a child.

Small Gifts: You can give as many gifts of up to £250 per person as you want during the tax year, provided you haven’t used another exemption on the same person.

Potentially Exempt Transfers (PETs)

Overview: If you live for seven years after giving a gift, it’s usually exempt from IHT. This is known as a Potentially Exempt Transfer (PET).
Taper Relief: If IHT becomes due on a gift and it’s been over three years since the gift was given, taper relief might reduce the tax owed.

Strategies for IHT Reduction

Gifts out of Income: Regular gifts made from your after-tax income, not affecting your standard of living, can be exempt from IHT.
Setting Up Trusts: Placing assets in trust can be an effective way to manage and protect them, potentially reducing the IHT liability.
Life Insurance: Taking out a life insurance policy can cover the anticipated IHT bill. It’s essential the policy is written in trust to ensure it doesn’t form part of the estate.

Business, Farming, and Woodland Reliefs

Overview: HMRC offers specific reliefs for business assets, agricultural property, and woodlands. These reliefs can either reduce the value of the asset or remove the asset’s value entirely from the IHT calculation.

Why IHT Matters?

  • Preserve Wealth and Maximize Allowances: Proper planning ensures that a significant portion of your estate is passed to beneficiaries, making full use of available reliefs, exemptions, and allowances.
  • Relieve Beneficiary Stress: A well-organized estate alleviates the emotional and administrative burdens on loved ones during an already challenging time, ensuring smooth asset distribution.
  • Flexible and Customized Asset Distribution: Tools like trusts offer tailored approaches to estate distribution, addressing unique family needs and business continuities.
  • Ensure Compliance and Future-readiness: Effective IHT planning ensures adherence to legal obligations, prepares for potential legislative changes, and offers clarity on overall financial health.

With Clearcut Accounting 

With our guidance, you can navigate the intricacies of Inheritance Tax Planning with assurance and vision.

Expertise & Knowledge

Clearcut’s deep understanding ensures accurate, up-to-date advice tailored to individual situations.

Strategic Approach

We provide strategic, compliant IHT solutions, ensuring maximum benefits for beneficiaries.

Comprehensive Service

A holistic approach to managing assets, from trusts to insightful life insurance advisories.

Personalized Attention

Each client receives bespoke planning, considering their unique legacy aspirations.

GP practice incorporation

Clearcut Accounting was the missing piece of the puzzle.

Our GP practice has been working with Clearcut Accounting for our accounting needs and we couldn’t be happier with the level of service and expertise they provide. They have a deep understanding of the healthcare industry and the specific financial and compliance needs of GP practices. Their tailored approach and attention to detail have been instrumental in helping us make informed decisions and grow our business. They are always available to answer our questions and provide support when needed. We highly recommend their services to other GP practices.

Dr. S Abdi

GP practice– Liverpool

Tax efficiency

Clearcut Accounting has been a lifesaver for my growing business.

Working with my accountant at Clearcut Accounting has been a pleasure for our bakery business. They have a deep understanding of the unique financial and compliance needs of the food industry. Their advice and guidance on cost management, tax planning and compliance has been invaluable in helping us make informed decisions and grow our business. They are always available to answer our questions and provide support when needed. I highly recommend their services to other bakery and food business owners.

Stephanie Hughes

Founder – Vanilla

Great benefits from Clearcut Accounting.

Experience the benefits of our professional accounting services: accuracy, efficiency, compliance, real-time data, improved cash flow, expert guidance, personalized service, and more.

  • Offers comprehensive and accurate accountancy services, ensuring compliance with The UK Tax laws.

  • Get peace of mind knowing that your financial records are accurate and up-to-date.
  • Make informed business decisions with access to real-time financial data and analysis.

  • Streamline your financial processes and improve efficiency.

  • Reduce the risk of errors and mistakes in your financial records.

  • Save money by taking advantage of our competitive pricing.

  • Reduce your workload and free up time to focus on other areas of your business.

  • Stay compliant with all relevant tax laws and regulations.

  • Improve your cash flow management with our expert guidance.
  • Get access to a team of experienced and certified accounting professionals.
  • Receive personalized and customized service to meet the specific needs of your business.
  • Improve your business’ financial reporting and transparency.
  • Gain a better understanding of your business’s financial health.
  • Identify areas for improvement and growth within your business.
  • Leverage our advanced tools and technologies to streamline your accounting processes.

  • Stay up-to-date with the latest accounting trends and best practices.

  • Enjoy flexible and convenient service options to meet your schedule and needs.
  • Get a partner you can trust to handle all of your accounting needs.

  • Experience the benefits of working with a reliable and reputable accounting firm.

Need a personalized solution?

Yes, we offer personalized solutions tailored to your specific needs and preferences. Please contact us to discuss your requirements and we will create a customized solution for you.

How we can help?

Get a personal consultation.

Office

Parkway 5, 300 Princess Road, Manchester, M14 7HR

Contact

info@clearcutaccounting.co.uk

Open Hours

Monday – Friday: 9am – 6pm

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