Inheritence Tax Planning
Inheritence tax is a complicated area and can be a very expensive tax for those who leave estates valued over the current threshold.
Its a goverment tax on a persons estate this being defined as the value of property, money and possessions.
The current threshold is £325,00 and the current tax rate is 40%. So if for example your estate is £425,000 then your £100,000 over the threshold which would be taxed at 40% so would be £40,000.
Homes are usually the largest asset and can on their own take a person over the threshold. There is an incresed allowance that some people qualify for when they leave a home to children this currently stands at £475,000.
The inheritence burden can be planned for. There are some simple steps that can be taken to take some assets away from the value of the estate. Gifiting can also remove assets from the estate, although you would lose control off these assets as to qualify the gift needs to be a true gift. There is a seven year rule around gifting which we will explain in more detail when we provide advice.
The first step when you think you might have an inheritence tax issue is to establish the issue. This will often involve working with your accountant. It may involve bringing in family members to the planning. The key and biggest tip is the earlier you start to plan against this tax the more effiective your plan can be.
Past performance is not an indicator of future performance. The value of investments and income derived from them may go down as well as up and you may not necessarily get back the amount you invested.