About inheritance planning

Inheritance tax (or IHT) is charged when you die, based on the value of your assets above the IHT threshold. These assets are known as your estate and can include:

• Property - your main home and any holiday homes – including homes overseas
• Investments - such as cash in your bank account, stocks and shares and any other investments
• Life insurance - the payout under any life assurance plans not written under trust
• Other valuables - including jewellery and cars

When the tax is payable

IHT is payable when you die. It’s based on the total value of your assets when you die, including any assets you’ve transferred during the previous seven years.

At the moment, the inheritance tax rate is 40%. However, some gifts made more than two years before your death could qualify for a lower tax rate.

What this could mean

Let’s imagine your estate, including your main home, life assurance policies and valuables, amounts to half a million pounds.

If you haven't made any inheritance plans, the taxman could take as much as £70,000 in IHT when you die. This example is based on 2010/11 tax rates and bands

• Find out how to reduce your IHT liability

Take steps to reduce your inheritance tax liability

There are a few things you can do to keep your inheritance tax liability as low as possible.

Make a will

This is the first step in making effective inheritance plans. A will makes sure your assets go to the people you choose, quickly and with minimum effort. It also helps you to identify areas where you could take other action.

• More on the NatWest Will Writing Service

Make gifts during your lifetime

Some gifts are free from inheritance tax. Making these tax-exempt gifts every year can help cut your inheritance tax bill.

Use life cover to pay the tax bill

When a life insurance policy is written under trust for a named beneficiary, it doesn’t become part of your estate for inheritance tax purposes. Your dependants can use the benefits from such a life insurance plan to pay the inheritance tax bill.

Get financial advice

If you want to talk to NatWest about inheritance planning or will writing, call us on 0800 051 1871.

Did you know?

How much is your estate worth?

Your home is probably your single most valuable asset. But what else do you own?

Some of your other assets could be taken into account by HM Revenue and Customs. These include your car, life assurance policies that haven’t been written under trust, bank and building society deposits, and other investments such as stocks and shares.

Get financial advice

If you want to talk to NatWest about inheritance planning or will writing, call us on 0800 051 1871.

Some gifts you make during your lifetime are exempt from inheritance tax. We’ve included the main exemptions here. If you make a transfer to your spouse, this will always be exempt as long as they have a permanent UK home.

For more information on making the most of your exemptions, call us on 0800 051 1871