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Passing on wealth

Learn more about growing your wealth for the future and inheritance planning.

Important information - The value of investments can go down as well as up so you may not get back what you invest. Tax treatment depends on individual circumstances and all tax rules may change in the future. Eligibility to invest in a SIPP and tax treatment depends on personal circumstances and all tax rules may change in the future. You cannot normally access money in a SIPP until age 55 (57 from 2028). It’s important to understand that pension transfers are a complex area and may not be suitable for everyone.

Planning ahead can bring peace of mind

There are few certainties in life, but here's one you can plan for. And even though you're naturally more focussed on growing your wealth for the here and now, we understand how comforting it can be to put your affairs in order - so that you can pass on as much of your wealth as possible when the time comes.

To help you prepare, we'll guide you through some useful topics - such as inheritance planning, gifts and inheritance tax and what happens to your pension when you die.

Ready to get started with your inheritance planning?

There's a lot to think about when it comes to inheritance planning. And with so many options available, it can really help to talk to someone about your investments, particularly about your pensions. Our financial advisers are here to listen and to provide a personal recommendation - whether you're looking for advice on a one-off or ongoing basis.

Learn about Fidelity's advice service

Take stock of your accounts

It's not unusual to collect a number of different investments and pensions over the years as you move jobs, have children or perhaps your needs change with time. By moving all your accounts into one place, not only does it make it easier for you to manage your investments, it'll make it more straightforward to pass everything on further down the line.

Important information: This information is not a personal recommendation for any particular product, service or course of action. It’s important to understand that pension transfers are a complex area and may not be suitable for everyone. Before going ahead with a pension transfer, we strongly recommend that you undertake a full comparison of the benefits, charges and features offered. To find out what else you should consider before transferring, please read our transfer factsheet. If you are in any doubt whether or not a pension transfer is suitable for your circumstances we strongly recommend that you seek advice from one of Fidelity's advisers or an authorised financial adviser of your choice.

Understanding inheritance tax and inheritance tax thresholds

Inheritance tax is the tax levied on your estate (in other words your property, money and possessions) when you die. Contrary to what you might think, the vast majority of estates aren't impacted by inheritance tax, which is also known as IHT.

Here’s a summary of the UK rules based on our understanding. Remember that these rules can change and are complex, so please don't rely solely on this information for your inheritance tax planning decisions and think about getting professional advice for effective planning.

What are the IHT thresholds and standard rate of IHT?
Are there any general IHT pointers I should know about?
How does IHT work on investments?
What's the IHT on a main residence?

Passing on your pension

Your pension often sits outside your estate and doesn't normally count towards your estate's value. If you don't need to touch it during your retirement you may want to leave it invested for your loved ones to have in its entirety.

If you need to use your pension as income in your retirement, whatever's left can be passed on to your beneficiaries. How much income tax they'll need to pay depends on your age when you die.

IHT and your pension

Make your wishes known

You can help make life easier for your family by being clear about what you want while you still can.

  • Draw up / update your will - A will lays out your wishes and is legally binding, which helps avoid any future confusion and time delays, and a solicitor will be able to help you with this. If you don't have a will, the law states how your estate is passed on.
  • 'Expression of Wish' form - If you have thoughts about how you want your pension to be shared when you die, you should update your pension's 'Expression of Wish' form. This lets scheme administrators know who you'd like them to pay pension benefits to.

Gifts and inheritance tax

When it comes to gifts and inheritance tax, there are plenty of ways your nearest and dearest can enjoy your generosity while you're still around to see the joy it brings - with no IHT implications. It's worth keeping a record of any gifts, as they may be called into question at a later date.

Always be aware that tax rules change, so please double-check what you can and can't do and consider professional advice.

Gift Amount The detail
The seven-year rule for gifts N/A You can gift any amount of assets with no IHT to pay if seven years pass without you dying. If you die within seven years, a reduced rate applies to any amount above your nil-rate band (40% within three years; 32% after three years; 25% after four years; 16% after five years and 8% after six years)
Annual exemption £3,000 per year You can give away £3,000 per year (assets or cash), divided between one or more people, without IHT applying at all. You can also carry forward one preceding year of annual exemption to gift £6,000 in one year.
Small gifts £250 per year You're allowed to give £250 per person per year to as many people as you like without IHT applying (as long as they haven't benefitted from your annual exemption).
To help pay for a wedding £1,000 to £5,000 You can contribute to someone's wedding, as long as you gift this amount before the wedding day and it actually takes place. You can give £1,000 to anyone you know; £2,500 to a grandchild and £5,000 to a child.
To financially support a child N/A You can pay for the living costs of your own child under age 18, or in full time education. This includes university, but you may need to show that financial support is not excessive and only covers living costs and tuition fees.
Regular gifts from income N/A You can also give regular amounts away that you don't need from your income, without IHT applying. You may have to show that this money was not needed to maintain your standard of living.

And finally, a note about trusts

One of the ways you could minimise how much inheritance tax any loved ones will have to pay is through a trust. This isn't something we're able to offer advice on, but it might be something you want to consider. If you do, we recommend you contact a specialist to get more information. Here's a brief overview:

  • What a trust does. It's a legal arrangement that allows you to give assets to someone else to look after on behalf of a third person - such as a child or relative.
  • Setting up a trust. You'll need to state what the assets are in the trust, who the trustee and beneficiaries are and when the trust becomes active (when the assets no longer belong to you) - immediately, or when you die.
  • Inheritance Tax. If you put cash, investments or property in a trust, it typically means it's no longer part of your estate  (as long as certain conditions are upheld) and therefore not subject to IHT.
  • Different types. There are a number of different types of trust and the one you choose will depend on what you want it to do.

Thinking about your options

Inheritance planning can be complex and talking to a financial adviser who can help you with your investments is a great start. Or, you might like to start by taking more control of your savings and bring them under one roof.

Talk to a financial adviser

Our financial advisers can provide a personal recommendation for a one-off event or ongoing advice for more complex needs. You can also talk to a specialist about your retirement.

Fidelity's advice service

Transfer an account

Move your ISAs, pensions, investment and junior accounts over to Fidelity. If you decide a transfer is right for you, we'll do the hard work.

Transfer an account

If you're new to Fidelity and would like to open an account, you can find out more on our account opening page.