Inheritance tax is a wealth tax that is paid at death, though it may also be applicable to some presents given while you are still alive. If you don't consider about inheritance tax planning advice, you could end up with a higher inheritance tax bill and less money for your loved ones.
Many people mistakenly think that inheritance tax only applies to wealthy families; however, as housing costs have increased, more of us are now subject to inheritance tax. The standard amount for inheritance tax is 40%.
What guidelines apply to married spouses regarding inheritance tax?
Most of the time, if you are married or in a civil relationship, you can transfer your assets to your partner tax-free. Then, the surviving spouse may make use of both tax-free allowances. The surviving partner will be entitled to an IHT allowance if the first individual to pass away leaves all of their assets to their surviving spouse.
How does the IHT process for house transfers work?
When you pass away, your husband, wife, or civil partner can inherit your house tax-free. However, if you give the house to someone else in your will, it will be included in the estate's value.
In order to make it simpler to transfer your primary residence to a child or grandchild without having to pay IHT, an additional allowance was implemented.
A surviving spouse or civil partner may inherit any unused portions of the residence nil-rate band, just like with the regular nil-rate band.
How might our guidance on inheritance tax benefit you?
Our inheritance tax planning advice could assist you in organising your assets, estimating the probable tax burden on your estate, and possibly assisting in lowering the potential liability.
Before putting together a special financial plan, our team of financial advisors could discuss your requirements and the needs of your loved ones. We'll work with you to determine how much assistance you require to implement that no-obligation strategy after it has been created. We can assist if you're unsure of the potential cost to your inheritance or how to minimize it.
How to lower your inheritance tax obligation
Employ your assets
Another strategy for minimising IHT is to keep funds in a defined contribution plan. Pensions are typically exempt from IHT because, unlike other assets, they are not included in your taxable inheritance. It can be a good idea to pass along your fortune to future generations while keeping it enclosed in a pension plan.
Your annuity will be transferred tax-free if you pass away before age 75. Your beneficiaries will have to pay tax on the profits at their highest income tax rate if you pass away after turning 75. Your will does not apply to your pension, so you must make sure your pension supplier is aware of the beneficiaries you have designated.
Abraham & Associates, leading tax advisor in Southend On Sea, Essex provides complete accounting solutions on personal tax returns, expatriate and non-resident tax, inheritance tax and estate planning, personal tax planning and financial services.http://www.abrahamandassociates.co.uk/
