inheritance tax
Most people never think about Inheritance Tax, but after the steep increases in property prices over recent years many more families will now be potentially liable. Inheritance tax is currently payable at the rate of 40% on any surplus in your estate over £300,000. If you don't want the Revenue to be one of the largest beneficiaries of your estate then you need to take some action. IHT is a complex subject and the right course of action will depend on your personal preferences and objectives.
Actions to take to reduce your estates IHT Liabilities
- Draw Up a Will
This is a sensible action regardless of your IHT situation, as if you die intestate (without a will) there will be a delay in the administration of your estate and the allocation of your assets may not be distributed in accordance with your wishes.
If you are Married and already have a will in place you may need to ensure that this is a discretionary will trust which will give your beneficiaries more opportunity for tax planning.
- Tax Efficient Investments
Consideration needs to be given as to what type of investment vehicle to use and in whose name the investments should be held to ensure maximum efficiency
- Gifts
Some gifts will automatically be excluded from your estate but others may be classed as Potentially Exempt Transfers (PET), in which case you will need to survive a further seven years to ensure they are outside your estate for inheritance tax
- Life Assurance
A regular premium life assurance policy written in trust won’t reduce your IHT liability but it will provide funds to the beneficiary to ensure they are able to pay the IHT liability ensuring the value of your estate is intact.
- Trusts and Bespoke Schemes
For large estates you may wish to consider setting up a trust arrangement designed around your requirements to ensure a balance between minimising tax liability and retaining control of the assets.
