Inheritance Tax, Capital Gains Tax, and Succession Planning

Planning for the future is essential to safeguard your wealth for future generations. Understanding how Inheritance Tax (IHT), Capital Gains Tax (CGT), and Succession Planning affect your estate can help protect your assets while ensuring your family’s financial security. At DTM Legal, we provide expert advice on handling these intricate matters, helping you make informed decisions that align with your long-term goals.

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Our Tax and Succession Services

We offer bespoke services to help you plan effectively for Inheritance Tax, Capital Gains Tax, and Succession. Our team will guide you through strategies designed to minimise tax liabilities, structure your estate efficiently, and ensure a smooth transition of assets to your beneficiaries. Our services include:

• Inheritance Tax Planning: Helping you mitigate IHT through exemptions, reliefs, and trusts.
• Capital Gains Tax Advice: Offering strategies to minimise or defer CGT on property, shares, and other valuable assets.
• Succession Planning: Assisting with family business succession, to plan a seamless transfer of ownership and wealth.
• Trust Creation and Management: Setting up trusts to protect assets and provide for future generations.
• Lifetime Gifting: Advising on tax-efficient ways to pass on wealth during your lifetime.

Key Tax and Succession Planning Terms Explained

• Inheritance Tax (IHT): A tax on the estate (property, money, and possessions) of someone who has passed away. The standard current rate is 40%, charged on the portion of the estate not eligible for reliefs above the current £325,000 threshold.
• Capital Gains Tax (CGT): A tax on the profit made when you sell (or ‘dispose of’) an asset that has increased in value, such as property or shares.
• Succession Planning: The process of preparing for the transfer of wealth and assets to the next generation, ensuring business continuity and preserving family wealth.
• Trusts: A legal arrangement where assets are held by Trustees for the benefit of named beneficiaries, often used for tax planning or protecting family wealth.

Frequently Asked Questions

1. How can I reduce my Inheritance Tax liability?
   You can reduce your IHT liability through the use of trusts, making charitable donations, gifting during your lifetime, amongst other planning options. We can help identify the best options based on your circumstances.
2. Is Capital Gains Tax payable on my family home?
   Generally, CGT is not payable on your main residence, but if you own multiple properties or have let your property, CGT may apply when selling.
3. What is the nil-rate band for Inheritance Tax?
   The nil-rate band is the amount of your estate that is not subject to Inheritance Tax, currently set at £325,000. There is also a residence nil-rate band that applies in certain cases, increasing the threshold when your main residence is passed on to your direct descendants on death.
4. How can I ensure my business is passed on tax-efficiently?
   Business Relief can reduce the IHT charge on the business assets for IHT purposes. Succession planning, including the use of family trusts, can help provide a smooth, tax-efficient transfer of ownership.

Considerations Before Speaking to a Solicitor

Before discussing your Inheritance Tax and Succession Planning, it’s important to consider the following:

• Current Estate Value: Have an understanding of your total estate value, including property, savings, investments, and any business interests.
• Your Goals: What do you want to achieve with your estate? Is your priority reducing tax liabilities and / or ensuring financial security for your family?
• Family Dynamics: Consider any specific needs of your beneficiaries, such as children or vulnerable dependants, and how your plans may impact them.
• Existing Wills or Trusts: Review any current legal arrangements you have in place, such as Wills or Trusts, to ensure they align with your goals.

Contact a Specialist Estates Solicitor

If you would like to discuss how Inheritance Tax, Capital Gains Tax, and Succession Planning can benefit you and your family, we are here to help. Contact Heather Lally, Partner in our Trusts and Estates team, by calling 01244 354822 or via email at heather.lally@dtmlegal.com.