Inheritance Tax planning
We pride ourselves on being able to pass on our inheritance to our loved ones. We work hard throughout our lives to ensure they have a nest egg once we’re gone. However, without a comprehensive estate plan in place, there’s a risk some of your assets and wealth could end up in the hands of the revenue after you pass away, meaning your family and friends don’t benefit as favourably as they should.
Currently, the standard inheritance tax rate is 40 per cent, which is charged on the part of your estate that’s above a threshold of £325,000.
There’s normally no Inheritance Tax to pay if either:
- The value of the estate is below the £325,000 threshold
- Everything above the £325,000 threshold is left to a spouse, civil partner, a charity or a community amateur sports club
You should also bear in mind that if you give away your home to your children, including those who are adopted, fostered and any step children, your threshold may increase to £500,000.
If an estate’s value is below the £325,000 threshold, it still must be reported to HMRC. If you’re married or in a civil partnership and your estate is worth less than the threshold, any unused threshold can be added to your partner’s threshold when you die. This means their threshold can be as much as £1million.
The beneficiaries in a Will don’t normally pay tax on the things they inherit. Those who receive gifts from your Will might have to pay Inheritance Tax, but only if you give away more than £325,000 and die within seven years.
Inheritance tax is often referred to as the ‘voluntary tax’ as there are plenty of ways to reduce your liability to a more manageable level, including the use of Lifetime Gifts, Life Insurance Cover, succession planning and business exit strategies.
To achieve this, however, requires significant planning over an extended period of time, with the Estate Planning Solutions team able to help you on this journey. The sooner you start to think about estate planning, the better.
We’re available to tell you more about Inheritance Tax and estate planning.