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We understand that with today’s busy schedule, Inheritance Tax (IHT) planning might not be at the top of your to-do list. But as a Chartered Accountancy practice specialising in Barrister accounts, we believe it’s vital to keep our clients informed about their IHT positions.
Without IHT planning, if your total assets exceed the £325,000 threshold (or £650,000 for married couples or civil partners) upon your death, any amount beyond this will attract a 40% tax rate (this does not include leaving your assets to your spouse or civil partner, or the Residence Nil Rate Band – see point one below). These taxes could place a significant financial burden on your loved ones, leaving them with difficult decisions during an already challenging time.
IHT planning allows you to have complete control over what happens to your assets, enabling you to provide for your family, minimise tax liabilities, and avoid potential disputes.
As a barrister, your earnings can be highly variable, and your wealth may be tied up in illiquid assets, such as property or chambers contributions, which can complicate long-term financial planning. Additionally, it’s likely that you’ll reach your highest earning years much later in your career, which is why planning earlier is crucial.
‘IHT planning should be considered in your forties or fifties to maximise the use of all available incentives, particularly as a barrister, given that your income is likely to increase towards the end of your career.’ IHT specialist – Aaron Young (CTA, ACCA)
IHT planning very much depends on your circumstances, but here are some of the ways we help our clients work within current tax planning legislation:
The RNRB permits individuals to pass on an additional £175,000 of their property value to direct descendants, such as children or grandchildren, tax-free. This is in addition to the £325,000 allowance per person. Additionally, any unused allowance may be transferred to a spouse or civil partner, further amplifying the benefits. The RNRB is not automatically applied to an individual’s estate. It must be claimed by the executor or personal representative of the estate using the appropriate forms.
There are various ways to make gifts which are exempt from tax, from the annual exemption of £3,000 per year (which can be carried forward) to the gifting of surplus income.
Most larger gifts, known as Potentially Exempt Transfers cease to be considered for IHT after seven years. You are also able to make small gift allowances of up to £250 per person (as long as you haven’t used another gift allowance for this person).
Pension contributions have been a fundamental aspect of IHT planning for many years. However, in the Autumn Budget 2024, Chancellor Rachel Reeves introduced critical changes to the Inheritance Tax treatment of pension funds. Starting from April 2027, the majority of unspent pension funds will be included in the valuation of an individual’s estate for IHT purposes. The primary exception to this rule is for dependants’ scheme pensions, which cover payments to a surviving spouse or child. These changes will directly impact the value of your estate, making it essential to seek professional advice to navigate them effectively.
Barristers typically don’t own ‘trading businesses,’ but certain investments can qualify for Business Relief if held for at least two years before death. Our advisors can explore qualifying investments that align with your financial goals.
Trusts remain a robust tool in managing IHT exposure. For barristers, this is especially valuable if your estate includes chambers property or other high-value assets. Discretionary trusts, in particular, can offer you flexibility while maintaining control over the distribution of assets.
You could take out life insurance to cover estimated IHT liabilities. This will ensure that your beneficiaries can settle the tax bill without needing to sell any assets.
Donations to UK-registered charities offer full IHT exemptions and can lower the IHT payable by the estate. Additionally, lifetime gifts may qualify for Gift Aid, maximising their impact and providing income tax relief, which is especially useful during high-income years. Establishing a charitable trust offers control and flexibility, ensuring that funds are distributed according to specific wishes.
As an independent Chartered Accountancy practice, we have specialist tax advisors who have undergone extensive tax training. We also have a Wealth Management department, whose financial planners are FCA-accredited and able to provide regulated financial advice on pensions and investments. These are the highest qualifications available in this field, and we all adhere to the strictest ethical standards.
‘Thank you for your help with Colin’s estate, in fact, with everything over the years for all of us.’ Linda
If you would like us to advise on your circumstances, we offer a free consultation to assess whether you’re likely to benefit from IHT planning. If you wish to proceed, a comprehensive IHT planning report is £2,500 + VAT, which includes our report and our plan of action meeting.
Please get in touch with Aaron for more details: aaron@rwbca.co.uk – direct line: 0115 964 8876.
‘The whole team is very efficient and responds to any questions or queries immediately. We are very happy with the service.’ Mrinal
For further details please go to: www.rwbca.co.uk/our-services/barristers
Nick Bonnello is the Managing Director of RWB Chartered Accountants and heads up the specialist Barrister Tax and Accounts team.
Aaron Young is Director of RWB Chartered Accountants. He is a Chartered Tax Adviser (CTA) with extensive experience.
We understand that with today’s busy schedule, Inheritance Tax (IHT) planning might not be at the top of your to-do list. But as a Chartered Accountancy practice specialising in Barrister accounts, we believe it’s vital to keep our clients informed about their IHT positions.
Without IHT planning, if your total assets exceed the £325,000 threshold (or £650,000 for married couples or civil partners) upon your death, any amount beyond this will attract a 40% tax rate (this does not include leaving your assets to your spouse or civil partner, or the Residence Nil Rate Band – see point one below). These taxes could place a significant financial burden on your loved ones, leaving them with difficult decisions during an already challenging time.
IHT planning allows you to have complete control over what happens to your assets, enabling you to provide for your family, minimise tax liabilities, and avoid potential disputes.
As a barrister, your earnings can be highly variable, and your wealth may be tied up in illiquid assets, such as property or chambers contributions, which can complicate long-term financial planning. Additionally, it’s likely that you’ll reach your highest earning years much later in your career, which is why planning earlier is crucial.
‘IHT planning should be considered in your forties or fifties to maximise the use of all available incentives, particularly as a barrister, given that your income is likely to increase towards the end of your career.’ IHT specialist – Aaron Young (CTA, ACCA)
IHT planning very much depends on your circumstances, but here are some of the ways we help our clients work within current tax planning legislation:
The RNRB permits individuals to pass on an additional £175,000 of their property value to direct descendants, such as children or grandchildren, tax-free. This is in addition to the £325,000 allowance per person. Additionally, any unused allowance may be transferred to a spouse or civil partner, further amplifying the benefits. The RNRB is not automatically applied to an individual’s estate. It must be claimed by the executor or personal representative of the estate using the appropriate forms.
There are various ways to make gifts which are exempt from tax, from the annual exemption of £3,000 per year (which can be carried forward) to the gifting of surplus income.
Most larger gifts, known as Potentially Exempt Transfers cease to be considered for IHT after seven years. You are also able to make small gift allowances of up to £250 per person (as long as you haven’t used another gift allowance for this person).
Pension contributions have been a fundamental aspect of IHT planning for many years. However, in the Autumn Budget 2024, Chancellor Rachel Reeves introduced critical changes to the Inheritance Tax treatment of pension funds. Starting from April 2027, the majority of unspent pension funds will be included in the valuation of an individual’s estate for IHT purposes. The primary exception to this rule is for dependants’ scheme pensions, which cover payments to a surviving spouse or child. These changes will directly impact the value of your estate, making it essential to seek professional advice to navigate them effectively.
Barristers typically don’t own ‘trading businesses,’ but certain investments can qualify for Business Relief if held for at least two years before death. Our advisors can explore qualifying investments that align with your financial goals.
Trusts remain a robust tool in managing IHT exposure. For barristers, this is especially valuable if your estate includes chambers property or other high-value assets. Discretionary trusts, in particular, can offer you flexibility while maintaining control over the distribution of assets.
You could take out life insurance to cover estimated IHT liabilities. This will ensure that your beneficiaries can settle the tax bill without needing to sell any assets.
Donations to UK-registered charities offer full IHT exemptions and can lower the IHT payable by the estate. Additionally, lifetime gifts may qualify for Gift Aid, maximising their impact and providing income tax relief, which is especially useful during high-income years. Establishing a charitable trust offers control and flexibility, ensuring that funds are distributed according to specific wishes.
As an independent Chartered Accountancy practice, we have specialist tax advisors who have undergone extensive tax training. We also have a Wealth Management department, whose financial planners are FCA-accredited and able to provide regulated financial advice on pensions and investments. These are the highest qualifications available in this field, and we all adhere to the strictest ethical standards.
‘Thank you for your help with Colin’s estate, in fact, with everything over the years for all of us.’ Linda
If you would like us to advise on your circumstances, we offer a free consultation to assess whether you’re likely to benefit from IHT planning. If you wish to proceed, a comprehensive IHT planning report is £2,500 + VAT, which includes our report and our plan of action meeting.
Please get in touch with Aaron for more details: aaron@rwbca.co.uk – direct line: 0115 964 8876.
‘The whole team is very efficient and responds to any questions or queries immediately. We are very happy with the service.’ Mrinal
For further details please go to: www.rwbca.co.uk/our-services/barristers
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