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inheritance TAX YOUR INHERITANCE. YOUR choice. It doesn’t matter who you are or how we’re helping you, there are five key principles that will always underpin the way we work. These are the things that make us different. They also ensure that together we can plan your future today to create a brighter financial tomorrow. Finance MADE frienDLY We’ll treat you like an individual, not just a number. For a stronger partnership and a far more personal approach to financial services, we’ll spend as long as it takes getting to know you, your lifestyle and your aspirations. Peace OF MinD We’ll always keep your peace of mind uppermost in ours, as well as keeping you informed throughout our partnership. By understanding your unique situation and goals we’ll only ever recommend financial products we know you’ll be comfortable with. OUR EXperience IMproVES yourS With a track record stretching back decades, you’ll reap the rewards of our expertise and our acute awareness that your best interests are ours too. TruST IS EVerythinG Our reputation is built on trust; we’ll make sure things stay that way by always acting with integrity and being true to our word. IT’S your Money At SFS it really is all about you, not us. That’s why we’ll never forget that it’s your money we’re dealing with and your financial future that matters. 2 PLANNING TOMORROW TOGETHER WILL YOU BE GIVING GENEROUSLY TO THE TAXMAN? Having worked hard all your life to build your financial portfolio and assets, it’s upsetting to know that 40% of everything over a certain threshold could be given back to the Government in Inheritance Tax (IHT). Your beneficiaries may have to pay this tax before they receive a single penny from your estate – at a time when they are least able to cope. The value of your estate could have risen substantially and increasing wealth could well mean that your loved ones may already be liable to pay IHT before they can inherit what is rightfully theirs. With the right planning through Skipton Financial Services Limited (SFS), you can reduce or even eliminate this tax altogether – potentially saving your loved ones thousands of pounds. 3 PLANNING TOMORROW TOGETHER What is InheritanCE Tax? No one wants to contemplate their own death, but if the value of your estate exceeds £325,000, if you’re single or divorced, or £650,000 if you’re married, or in a civil partnership (if you’re widowed, it is up to £650,000 depending on how much allowance was used when your partner passed away), you could be liable for a 40% tax bill on everything you own above your threshold. These IHT thresholds might sound a lot, but when you add up the value of all your belongings – such as your home, savings and investments – you might be surprised by how much your estate is actually worth, now and in the future. Did you know your estate can be made up of: • Your home and furniture • Savings and Investments • Jewellery and artwork • Land • Insurances • Car • A holiday home (in the UK or overseas) IHT thresholds frozen until 2018 Back in October 2007, hopes were raised that the IHT threshold would be increased to £1 million after the then- opposition party, the Conservatives, pledged to raise it if they came into power. Although in January 2010 George Osborne, now Chancellor of the Exchequer, stated that “only millionaires should have to pay Inheritance Tax”^, the Coalition Government which came into power later that year very quickly pledged to freeze the existing thresholds until 2015. It was briefly proposed, in December 2012, that thresholds would increase by 1% per year after 2015. But on 20 March 2013, the Government confirmed that thresholds will stay as they are for a further three years (meaning IHT thresholds will be frozen until 6 April 2018). A significant number of people have delayed taking steps to address their potential Inheritance Tax liability, in order to wait and see what happens after 2018. Yet this March 2013 announcement suggests that £1 million thresholds are highly unlikely to come into effect. Even the outcome of the next general election – scheduled for 2015 – offers insufficient prospects towards a change in Inheritance Tax rules. After all, the Labour party was originally responsible for setting the current thresholds. ^ Source: Daily Telegraph, June 2010 4 PLANNING TOMORROW TOGETHER How might your loved ones be affected by IHT? It’s not merely a matter of your loved ones receiving a reduced level of inheritance after you die – they may be left having to pay a 40% IHT bill before they can inherit what you want them to have. For example, a married couple who have both passed away, with an estate valued at £850,000, would potentially leave their loved ones liable for an £80,000 IHT bill (dependant on liabilities). In many cases, the intended beneficiaries would have to find that £80,000 to pay the taxman before they are allowed to access the inheritance. At what would already be a very difficult time, this problem could cause a significant level of anxiety and stress. We can help you The good news is there are simple solutions you can put in place to reduce or even eliminate your IHT liability – whilst still retaining control of and access to your estate. SFS can help you to identify your personal liability and offers advice on ways you can tackle the problem, suited to your individual circumstances. Over the years we have helped thousands of clients to potentially save millions of pounds in IHT by putting in place measures that will fulfil their inheritance wishes. More information on how SFS could help you appears on page 19. For now, this guide aims to help you calculate whether you might have a personal liability and explain some of the ways you could reduce or even eliminate it – so you can consider your next steps. Getting started – assessing your potential liability Over the next few pages there are calculators to help you work out how much your estate is worth – and how much IHT you may be liable for. Don’t forget this is not a static figure as your property and investments could increase in value over the next few years which, in turn, could increase your IHT liability. Just go to the page that matches your circumstances (i.e. whether you’re single or divorced, married or in a Civil Partnership, or Widowed) to calculate your potential liability. 5 PLANNING TOMORROW TOGETHER Single or divorced Up until at least 2018, your IHT threshold (nil rate band) is £325,000. Any part of your estate over this amount could be taxed at 40%. To use our calculator to work out how much your estate is worth, simply list all of your assets as mentioned below. Inheritance Tax Calculator House Value (including 2nd Property) £ Household Contents and Personal Effects £ Bank and Building Society Accounts £ Stocks and Shares £ Savings and Investments £ (including offshore, ISAs, Endowments, etc.) Other Assets £ (car, boat, Life Assurance not under trust, etc.) Assets Sub Total £ Subtract Debts £ (mortgages, other loans, etc.) Subtract Nil Rate Band £325,000 Approx Net Estate Size £ x 40% Total £ The table below illustrates how much IHT you could pay as a single or divorced person with no plans in place. Estate Value Taxable IHT Payable at 40% £325,000 or less £0 £0 £425,000 £100,000 £40,000 £525,000 £200,000 £80,000 £625,000 £300,000 £120,000 £725,000 £400,000 £160,000 £825,000 £500,000 £200,000 £925,000 £600,000 £240,000 £1,025,000 £700,000 £280,000 6 PLANNING TOMORROW TOGETHER Married/Civil Partners Up until at least 2018, your IHT threshold (nil rate band) – as a couple – is £650,000 (£325,000 each). Any part of your estate over this amount could be taxed at 40% upon the death of the 2nd spouse. To use our calculator to work out how much your estate is worth, simply list all of your assets as mentioned below. Inheritance Tax Calculator House Value (including 2nd Property) £ Household Contents and Personal Effects £ Bank and Building Society Accounts £ Stocks and Shares £ Savings and Investments £ (including offshore, ISAs, Endowments, etc.) Other Assets £ (car, boat, Life Assurance not under trust, etc.) Assets Sub Total £ Subtract Debts £ (mortgages, other loans, etc.) Subtract Nil Rate Band £650,000 Approx Net Estate Size £ x 40% Total £ Upon death of 2nd partner The table below illustrates how much IHT you could pay if married or in a civil partnership with no plans in place. Estate Value Taxable IHT Payable at 40% £650,000 £0 £0 £750,000 £100,000 £40,000 £850,000 £200,000 £80,000 £950,000 £300,000 £120,000 £1,050,000 £400,000 £160,000 7 PLANNING TOMORROW TOGETHER Widowed Up until at least 2018, your IHT threshold (nil rate band) – as a widow/widower – could be up to £650,000 (depending on how much allowance was used when your partner passed away). Any part of your estate over this amount could be taxed at 40%. To use our calculator to work out how much your estate is worth, simply list all of your assets as mentioned below. Inheritance Tax Calculator House Value (including 2nd Property) £ Household Contents and Personal Effects £ Bank and Building Society Accounts £ Stocks and Shares £ Savings and Investments £ (including offshore, ISAs, Endowments, etc.) Other Assets £ (car, boat, Life Assurance not under trust, etc.) Assets Sub Total £ Subtract Debts £ (mortgages, other loans, etc.) Assuming full nil rate band available Subtract Nil Rate Band £650,000 from death of first partner Approx Net Estate Size £ x 40% Total £ The table below illustrates how much IHT you could pay as a widow/widower.

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