Inheritance tax
One-minute guide
Who needs to worry about inheritance tax? Following the announcement made by the Chancellor during his Pre-Budget Report, anyone whose estate exceeds £600,000 when they die could face paying 40 per cent in tax on the sum above the threshold. Many ordinary people may now become higher rate taxpayers for the first time after death, as rising property prices have pushed many homes above the inheritance tax threshold.
What can I do to cut my inheritance tax bill?
By giving away money and assets early and often, you could cut the amount of tax paid by your beneficiaries after your death. For example, everyone can give away £250 a year to any number of people, plus gifts totalling £3,000 a year. Regular gifts out of income, such as contributing to your grandchildren’s school fees, are also exempt from inheritance tax.
What about larger amounts?
All outright gifts of any value made at least seven years before the donor’s death escape inheritance tax completely. Even gifts made more than three years before death may benefit from a reduced tax bill under taper relief rules.
What can I do to make life easier for my family after I die?
Make a Will and nominate your executors. Dying intestate without making a Will can cause complications and delay. Keep a file with a copy of your Will, a reference to where to find all the important papers and details of filing cabinets or safes.
How can I avoid causing problems after the current clampdown on lifetime gifts?
As the person giving away money and assets, write down what you have given to whom, and when.
What if I am the executor of an estate?
Consider seeking professional help from a solicitor or other qualified person. Prepare to face supplementary questions from HM Revenue & Customs about lifetime gifts.
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Levels and bases of, and reliefs from, taxation are subject to change.
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This article is for your general information and use only and is not intended to address your particular requirements. Although endeavours have been made to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No individual or company should act upon such information without receiving appropriate professional advice after a thorough examination of their particular situation. Any references made to the Pre-Budget Report may be subject to the Finance Bill becoming law. |