Losing a loved one can be a very distressing and upsetting time and the last thing you will want to worry about is paying Inheritance Tax. However, it is important to check you are not paying more than you need to.
Inheritance Tax is the tax payable on a person’s estate which can include property, cash and other assets, it will also include any gifts made in the previous seven years. You will need to pay Inheritance Tax if the estate is valued above the current threshold of £325,000.
From April 2017 a family home allowance has been phased in, this enables your family home to be passed on to your children or grandchildren tax-free after death. This allowance will be added to the £325,000 and in 2020/21 the maximum added is £175,000 providing a total of £500,000. This will also mean that married couples will have an aggregate of £1m joint nil-band rate.
Above this threshold there is a tax liability of 40% however this can be reduced significantly with some tax planning. There are also various deadlines and administration associated with Inheritance Tax, the deadline for paying tax is six months after the person has died. With some careful planning you can put in place facilities to ensure your tax liability is not more than it should be.
It is worth reviewing your tax position on a regular basis to ensure you are making the most of any available reliefs.
The knowledgeable and friendly team can review your existing inheritance tax planning and make recommendations.