Inheritance Tax (IHT) is levied against a person’s estate upon death. Currently an individual’s tax free allowance on death (the Nil Rate Band) is £325,000. The first £325,000 of an estate will effectively be taxed at 0% and any amount over this threshold is taxed at 40%.
IHT is also charged on disposals of assets within the seven years prior to death. Therefore any disposals within the last seven years will not only ‘eat away’ at your Nil Rate Band, but if they were to go over your nil rate band, would be subject to a lifetime tax rate of 20%.
It is possible to reduce the impact of IHT and even avoid it altogether with by planning and using the available exemptions. IHT planning tools include:
- Making use of the transferable Nil Rate Band
- Annual Exemptions
- Small gifts
- Wedding gifts
- Gifts from surplus income
- Charitable giving
- Potentially Exempt Transfers
- Reliefs for Business and Agricultural Property
- Utilising Trusts
- Tax efficient investments
- Using the family home, and
- Planning through your Will
Our Team can talk you through each of these exemptions and consider their most effective use in relation to your estate. Why not combine an IHT planning appointment with a Will review to ensure you have a tax efficient Will in place.
For more information on Inheritance Tax Planning and how we can help you, please contact our Wills and Probate Team on 01279 755777 or get in touch with Peter King, Partner in our Wills and Probate Department.