Inheritance tax is perhaps the most disliked of all taxes. People having worked hard and paid income tax and capital gains taxes throughout their lives are then subject to perhaps the heaviest tax of all, upon their death. No wonder clients wish to reduce or even avoid paying ‘death duties’. Inheritance tax is considered a voluntary tax, because with the right planning the tax can certainly be reduced and even avoided.
Inheritance Tax is often a complicated subject that can leave family members and loved ones paying significantly more in tax than necessary. Our financial advisers will explain how to help your children inherit more and give them the best future possible. We will work with you to ensure your hard work passes from one generation to the next.
Inheritance Tax (IHT) can apply to the worldwide assets of UK citizens. However not all of your estate is taxed, only that above the prevailing Nil Rate Band Allowance and Main Residence Nil Rate Allowance. The Nil Rate Allowance is currently £325,000 per individual so a married couple can potentially benefit from £650,000 of joint exemptions. The main residence nil rate allowance starts in April 2017 at £100,000 per individual and rises to £175,000 by 2020.
The cost of Inheritance Tax is 40% on all taxable assets above these thresholds making Inheritance Tax potentially the largest tax demand your children will ever face.
You may wish to reduce an inheritance tax liability by considering gifting directly to family members or use the range of inheritance tax efficient trusts that are available. You may wish to consider inheritance tax exempt investments or make provisions for your children to have the means to pay the eventual tax bill through a Whole of Life Assurance. There may be charities or political causes you'd like to consider supporting, taking advantage of their exemption from inheritance tax.
It’s Chris’s personal approach that makes all the difference to me, it makes such a difference having someone you can trust. When my husband died, I was very fragile, and Chris understood that.
Our initial client meetings are offered without cost or obligation. We will meet these costs as we are yet agree how best we can work together.
Inheritance Tax is a tax on death. The tax is applied to your estate if its taxable value exceeds the individual exemption allowance of £325,000. Not all assets held within an estate are taxable as some assets are exempt from inheritance tax.
Assets that are subject to inheritance tax typically include your home, other property, land, deposit accounts, shares, investment funds, insurance bonds, jewellery, art and antiques. Any assets of a similar nature held abroad are also included in your taxable estate.
There is no inheritance tax charged upon transfers on death between married couples or civil partners. Each individual benefits from a current nil rate allowance of £325,000 and therefore couples have a joint allowance of £650,000. Any unused allowance can be transferred to the surviving spouse.
On top of the nil rate allowance, homeowners with children can benefit from the main residence nil rate allowance. This allowance starts at £100,000 per individual in 2017 and rises by £25,000 each year to £175,000 in 2020. This allowance only applies to the value of the family home when inherited by the home owner’s children.
Other exemptions are given to privately owned businesses and farms that if trading are exempt from inheritance tax.
The value of the taxable estate above the nil rate and main residence nil rate allowances is subject to a 40% tax charge. If a net taxable estate was worth £2 million after all allowances were deducted then the inheritance tax demand would be £800,000.
The inherited estate is liable to pay the inheritance tax. The liability must be settled or agreed to be settled with HMRC prior to the granting of probate and the estate distribution.
If there are insufficient disposable assets in the estate then other assets will need to be sold to raise the capital.
The estate is required to pay inheritance taxes prior to the grant of probate and the distribution of estate assets to the beneficiaries of the will. Depending upon the nature of the assets, payment can be spread over a period of time. HMRC generally expect IHT to be paid within six months of death.
It is important that to ensure that your assets pass to the people you want them to then you should write a will. A will avoids your estate from being distributed in line with the intestacy rules and gives clarity to your family over your wishes.
Wills can always be changed, re-written or updated.
Make better informed estate planning decisions that are right for you, to help your children inherit more and give them the best future possible.
Guide to Estate PlanningWith many options available careful consideration is needed in order to avoid Inheritance Taxes in a way that complements not compromises your future. Our financial advisers will talk you through each of the relevant options and help you understand the benefits to you and your family.
Call 01792 477763 today or contact us and we'll arrange an initial meeting at no cost, to discuss your circumstances and explain how we can help you.
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