Inheritance Tax Advice

Although many people think that inheritance tax will not apply to their estate when they die, a quick calculation of the value of their house plus money in investments and savings could show that the value of their possessions is above the tax-free allowance of £325,000. The first £325,000 of a person’s estate is tax free and above this is taxed at 40%.

There is no inheritance tax to be paid on property or money that is left to a husband or wife, or civil partner or charity. A recent change in the law means that the £325,000 allowance for the first spouse or civil partner can now be added to the allowance of the second spouse or civil partner when he or she dies, making the total allowance before tax £650,000. The double allowance has to be applied for and is not automatically assumed.

Inheritance tax can be reduced through careful planning but because there are also pitfalls in making financial arrangements we can explain to you the benefits but caution you about potential problems so that you achieve a balanced plan to suit you. Options to consider include giving away a gift of money to keep the value of the estate below the taxable level but to completely avoid inheritance tax the gift has to be made seven years or more before the date of death but you must not receive a benefit from it (e.g. living rent free).

 

For further information or to speak to one of our experts, please contact us.