“The only two certainties in life are death and taxes” – Benjamin Franklin
Inheritance Tax (IHT) is usually payable on an Estate on the event of someone’s death. The current IHT threshold, also known as the 'Nil rate band', stands at £325,000. If your overall Estate is above this level, any excess amount will be taxed at 40%. Although there are some exceptions in respect of charities etc.
Since October 2007, any late spouse’s or civil partners unused nil rate band can be transferred to the second spouse or civil partner when they die. This will mean that currently on second death the IHT threshold will be £650,000.
How can one reduce the IHT liability if one’s Estate is worth more than the IHT threshold?
There are a number of ways to reduce the level of Inheritance Tax on one’s Estate, or provide funds to pay the tax bill, and highlighted below are a few simple examples;
Annual Allowance
Each individual can gift £3,000 each year (and any unutilised allowance from the previous year).
Potentially Exempt Transfers
Any lifetime transfer will be outside of an individual’s Estate if they survive seven years from the date of the transfer.
Whole of Life Policy
If an IHT liability is expected, a Whole of Life policy for the sum of the expected liability can be written into a Trust arrangement.
This policy will be payable on death of the life assured (or second death for couples), leaving Beneficiaries monies to pay all or part of any IHT liability.
The above examples are merely some of the actions that can be taken, there are many many more – if you would like more information please call Ward Williams Financial Services on 01932 830664 for an informal discussion, or to book an appointment with one of our highly qualified financial planners.
http://www.wardwilliamsfs.co.uk/
Inheritance Tax (IHT) is usually payable on an Estate on the event of someone’s death. The current IHT threshold, also known as the 'Nil rate band', stands at £325,000. If your overall Estate is above this level, any excess amount will be taxed at 40%. Although there are some exceptions in respect of charities etc.
Since October 2007, any late spouse’s or civil partners unused nil rate band can be transferred to the second spouse or civil partner when they die. This will mean that currently on second death the IHT threshold will be £650,000.
How can one reduce the IHT liability if one’s Estate is worth more than the IHT threshold?
There are a number of ways to reduce the level of Inheritance Tax on one’s Estate, or provide funds to pay the tax bill, and highlighted below are a few simple examples;
Annual Allowance
Each individual can gift £3,000 each year (and any unutilised allowance from the previous year).
Potentially Exempt Transfers
Any lifetime transfer will be outside of an individual’s Estate if they survive seven years from the date of the transfer.
Whole of Life Policy
If an IHT liability is expected, a Whole of Life policy for the sum of the expected liability can be written into a Trust arrangement.
This policy will be payable on death of the life assured (or second death for couples), leaving Beneficiaries monies to pay all or part of any IHT liability.
The above examples are merely some of the actions that can be taken, there are many many more – if you would like more information please call Ward Williams Financial Services on 01932 830664 for an informal discussion, or to book an appointment with one of our highly qualified financial planners.
http://www.wardwilliamsfs.co.uk/
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