Inheritance tax can cost loved ones hundreds of thousands of pounds in the event of your death, yet it’s possible to legally avoid, or possibly pay none at all.
The most important thing to do is examine whether you’ll pay inheritance tax and what to do about it.
When you die, the Government assesses how much your estate is worth. This includes the cash you have in the bank or in investments, any property or business you own, vehicles – even pay outs from life insurance policies. It then deducts your debts from this to give the value of your estate.
If this exceeds the inheritance tax threshold of £325,000 set by the Chancellor, you (or technically your estate) will pay tax at 40% on the amount over and above the threshold when you die. This is reduced to 36% if you leave at least 10% to a charity.
There is no Inheritance Tax between husband and wife and if one spouse dies the survivor can use their allowance, which gives a tax threshold of £650,000 before tax is due.
Lodge Financial Advice can give advice on the following to help reduce the estate or ensure there are sufficient funds to pay the liability
- Use of exempt gift allowances
- Potentially Exempt Transfers
- Discounted Gift and Income Plans
- Gift and Loan Trusts
- Whole of Life Plans
- Level Term Assurance
- Gift Intervivos
- Use of Trusts
- Make a Will