Inheritance Tax – What do you know?
Tax is a subject which people often don't know much about. You know that you have to pay it and, probably, that you pay more than you want to but rarely do people realise how much tax can affect you.
There are so many different taxes, some which affect you, some which don’t, some payable during lifetime, others on death.
When planning for your future it is essential that you consider any Inheritance Tax implications which may affect your estate.
Inheritance Tax is one tax that people often feel they cannot understand. People work all their lives and pay income tax, they buy items and pay VAT, they then save some of their hard-earned money and are taxed on any interest earned. You buy a house and pay Stamp Duty and this doesn’t even begin to take into account Capital Gains Tax... and then to top it off when you die your estate may be liable to Inheritance Tax.
Inheritance Tax used to be thought of as a tax for the rich. However a lot of people have more wealth than they realise – when considering assets such as pensions, death in service benefits and life insurances, your estate value soon adds up. Add these forgotten assets to the value of any house you may own and straight away you may well be over the inheritance tax threshold.
The general rule is that Inheritance Tax is payable on estates which are worth more than £325,000 and is charged at 40% of anything above the £325,000 threshold.
However, it is much more complex than that. The Inheritance Tax rules vary depending on what your assets are, how they are owned, whether you own things jointly, whether assets are held in trust, whether you are married, whether you are widowed, whether you leave assets to children and grandchildren or other people. The rules even change if you have made certain gifts within 7 years of your death. There are so many different considerations to take into account.
In addition, the rules change as time goes on so what did apply 10 years ago, is very different to what applies today.
For these reasons, it is essential that you take professional advice on how best to preserve your assets for future generations and avoid paying unnecessary tax.
Lauren Smith, Partner and Head of Wills, Trusts & Probate says:
"We are here to advise you what is best given your individual circumstances. One size does not fit all, so we feel it is important to sit down with you and discuss what you want to achieve and then advise you on the options available"
For more useful information on Inheritance tax, you can visit our dedicated inheritance tax webpages by clicking below: