Life after work

The information in this guide was last updated on 21/04/2017

Your plans for retirement might be anything – a dream holiday, a new house, a chance to go back to education or even starting your retired life in a brand new country. For all of them, you need to get on a solid financial footing. And because of inheritance tax you’ll want to start planning your legacies almost as soon.

Remember, this is long-term planning

At retirement you should review your long and medium-term investments, too – you could still be planning for the next 20 years at the time you retire.

Downsizing or releasing equity

If you’re feeling the pinch or want more ready money to enjoy, one option is to make the most of the value of your home. Moving is one option. Because you’re more flexible now commuting is a thing of the past, you might head to an area with lower housing costs or move to a smaller property.

There’s also the option to release equity from your current property. It's important you seek financial advice to understand the options available.

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Moving abroad

Starting a new chapter by moving abroad usually starts with finding a place to live; you could rent or buy depending on your circumstances. Unless you’re a cash buyer you’ll need to get a mortgage or sell your current home. It's a big decision so it's important you seek financial and legal advice before taking this big step.

Leaving a legacy

If you want to leave money or property to loved ones, make sure to think about Inheritance Tax (IHT). If your estate (the amount you have to leave) is worth more than the Inheritance Tax threshold, then there’ll be inheritance tax to pay on anything extra.

Each year the government sets an inheritance tax threshold, called the nil rate band. If your estate is worth less than this, it may not be subject to inheritance tax. The nil rate band is set at £325,000 per person, fixed at £325,000 until April 6, 2021. Usually anything above that will be taxed at 40% (unless 10% of the deceased's estate has been left to charity, then the rate is 36%).

Anything you gave away within seven years of your death also gets taxed, although there are exceptions – for a list of exemptions, see GOV.UK Inheritance Tax - Gifts. You should also look into the possibilities of leaving assets and money in trusts.

From April 2017, each individual will be offered a family home allowance so they can pass their home on to their children (including step, adopted and foster children), grandchildren or great grandchildren tax-free after their death. This will be phased in from 2017-18. More information about this is available from the GOV.UK Inheritance Tax: residence nil rate band (RNRB)

There are a lot of options when leaving a legacy. That’s why financial advice can be particularly useful. If you’re likely to top the Inheritance Tax threshold it’s well worth talking to a financial adviser.