The unpredictable nature of 2020 has no doubt forced people to consider getting their financial affairs in order. One particular area often overlooked is Inheritance Tax and the burden that this could place on your executors. Planning to minimise liabilities is essential.
In the words of Benjamin Franklin;
There are two certainties in life; death and taxes
The present rate of Inheritance Tax (IHT) that is payable by your executors on your taxable estate is 40%.
The Good News
You can reduce the impact of this tax, which effectively reduces the amount of your hard-won assets that is received by your beneficiaries.
- The first £325,000 is tax-free. This may increase to £500,000 if you leave your home to your children or grandchildren, and
- If you leave your estate to your spouse, civil partner or charities there is normally no IHT to pay.
- IHT is reduced to 36% if you leave more than 10% of your “net-value” estate to charity.
- Chargeable gifts made within the last seven years may be bought into account for IHT but are subject to a decreasing rate of IHT based on a sliding scale over the seven year period.
- Business assets relief may apply in which case those business assets would pass tax-free or be subject to a reduced rate. The same may also apply to agricultural property.
With Planning, You Can Reduce The Bill Now
Ironically, you don’t have to die to determine how much tax your estate will pay. It is possible to organise your affairs to reduce the future IHT bill by careful planning.
If you are interested in considering the options available to ensure more not less of your estate passes to your family, please call MJB Avanti (08000) 388 799 to discuss your options.