Inheritance tax is a tax that is due on any estate held within seven years of a death if the estate involved is above the Inheritance tax threshold, currently £325,000.00. Anything over this amount is taxed at 40%.
In October 2007 an increased threshold was introduced for married couples and civil partners. When the second partner dies they can increase the threshold to £650,000.00 for the year ending 5th April 2012.
Due to the process of a consistent rising of house prices and general personal wealth there are now more and more people that have estates (including assets & gifts) above the threshold.
Points for everyone to note when a death has occurred are:
A -The rate for Inheritance tax is currently 40%.
B -The Government counts on billions of pounds from Inheritance Tax.
C -IHT (Inheritance tax) cannot be avoided by “gifting” your house while you are still alive.
D -If you have assets above the threshold (see above) inheritance tax may be payable.
E -UK Assets held overseas will be taken into account.
Planning for these situations can be very important, with sound financial planning steps can be taken to reduce any IHT liability which may be incurred.
Areas to be looked at are:
– Having a Will
– The possibility of trusts
– Taking full advantage of all the allowances, Exemptions & reliefs available
– The seven year rule
Our aim is to provide our clients with competent sound advice with the intention of using our experience and vast knowledge of the tax system to reduce the possibility of paying any Inheritance Tax at all, and if that is not possible then we will look to take full advantage of every area which will help to keep our clients making tax savings long term.