Gifts, wills and death
Many more people have been stung by inheritance tax (IHT) in recent years after steep rises in house prices and an increase in buy-to-let entrepreneurs in the housing market.
Each individual has a tax-free allowance (£325,000 fro 2019/20), known as the nil-rate band. IHT only applies to the value of the estate above this at a rate of 40 per cent on death.
We can give you the advice you need to plan successfully for IHT and to make sure you take the right steps to minimize any liability you might have.
It’s not unreasonable to ask that since you’ve paid tax on your earnings throughout your life, why should they be taxed again on death? Especially as the tax rate is 40%!
The rationale behind this tax is supposed to be re-distributing wealth.
Inheritance tax (IHT) is the tax on the estate of someone’s who’s passed away,and, as with other taxes, the rules are not straightforward. You need to talk to someone who knows their stuff: like us. But we appreciate that mitigating IHT is a sensitive subject; for example, not everyone feels comfortable in giving away assets whilst they’re still alive.
What we can do?
As first steps, we’d typically liaise with your solicitor to check that your will has been properly drafted and review your affairs, seeing if they are structured in the most tax-efficient way: for your retirement and for estate planning. And that you are aware of the basic rules, such as making gifts.
How much is it?
Fees will depend on the complexity of the case and can be discussed.
If I’m married, would I exempt from IHT? Only if you leave your entire estate to your partner.
Will I have to pay IHT on my home? In 2015, the government introduced a law that allows main residences with values up to £1m to be IHT-free.
How is my estate valued? In essence, by deducting the value of your liabilities from the value of your taxable assets.
Who pays the IHT? Usually the estate of the deceased pays the tax, but sometimes it’s the beneficiaries. Some people take out insurance to pay IHT.
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