Inheritance tax planning advice
An increasing number of people have an Inheritance Tax (IHT) liability,
due to their wealth increasing at a greater rate than the nil rate band thresholds.
With the average house price in the UK breaking through the £200,000 barrier, IHT
is no longer a tax solely for the wealthy.
- The nil rate band currently stands at £300,000 (2007/2008)
- Upon death, if total assets exceed this amount, every £1 over the threshold will
incur 40% tax!
To fully mitigate or significantly reduce your potential inheritance
tax liability, check out some of the solutions below (to select
the appropriate solutions for you make sure you address inheritance tax mitigation
alongside your other financial objectives).
The solutions
A popular solution for married couple or civil partners wishing
to significantly reduce the Inheritance Tax bill
for your children is Inheritance Tax Planning Wills (graphical guide
). Check out how much you could save now by using the
free online inheritance tax calculator.
How does it work?
The Will works by stating that on the first death a sum of money up to the tax free
limit (currently £300,000) goes into a Trust. The surviving spouse will receive
the remaining estate exempt from Inheritance Tax.
Upon the second death the Trust continues (it can last for up to 80 years) and goes
to benefit your children and grandchildren. Upon death of the second spouse the
estate will pass to your children who will benefit from a tax free limit with additional
balances taxed at 40%.
This ensures the money in the Trust is not taxable and can, therefore, save your
children a tax bill of currently up to £120,000.
The provisions of the Trust allow your Trustees flexibility when dealing with the
Trust fund. This enables them to transfer the half share of the house or any money
in the Trust fund to the surviving spouse as a loan in return for payment back to
the Trust upon the second death. This gives the surviving spouse the independence
and security of the house or other assets whilst avoiding an expensive tax bill
on their death.
Other steps to reduce inheritance tax
- Make use of annual gift exemptions
- Give away high value, low income assets
- Set up a Trust
- Invest in exempt assets
- Spend it!
Contact us now to discuss how we can help you by completing our, no obligation,
online enquiry form and we
will call you back or you can call us directly on 0844 858 3200.