Avoiding Inheritance Tax
Avoiding inheritance tax can help beneficiaries to get the most out of your estate in the event of your death.
Inheritance tax is due on assets that you leave behind that amount to more £325,000. Once this threshold is surpassed all assets will be taxed at a rate of 40%. While this may seem like a lot, careful financial planning can help you in avoiding inheritance tax as far as is possible.
Avoiding and reducing inheritance tax can be achieved by giving away any assets that take you above £325,000 threshold before you pass away.
Avoiding inheritance tax- some key options:
Careful personal gifting. Any gift that you make during the last seven years of your life may be liable for inheritance tax payments. However, many gifts remain tax free. For example you may be able to give up to £3000 per year tax free during the last seven years of your life.
Making gifts to charity. Gifts to charity are exempt from inheritance tax, as are some gifts to national institutions and political parties.
To find out more about gifts that may be exempt from inheritance tax visit Inheritance tax gifts.
Leaving assets to a civil partner or spouse. Assets can be left tax free to a spouse or civil partner. Depending on your circumstances you may also be able to transfer any unused amount of your £325,000 inheritance tax free allowance to your spouse or civil partner in the event of your death. This means that your surviving partner may be able to leave up to £650,000 in the event of their subsequent death.
Reducing your assets, will in turn reduce your inheritnce tax bill. There are also other ways of reducing or avoiding inheritance tax depending on your individual circumstances. Although avoiding inheritance tax may seem attractive, you should always take care that you don't leave yourself short by giving away too much.
Financial planning for the future
Although it may not affect you directly, inheritance tax can can have a significant effect on assets that you leave behind for your loved ones. Careful financial planning can ensure that you are adequately provided for for the rest of your life and give you peace of mind knowing that family and friends will get the most out of your estate once you pass away.
To discuss your options for avoiding or reducing inheritance tax bill, and ensuring that beneficiaries get the most out your estate, speak to a member of an independent inheritance tax planning advice team for a free initial no obligation consultation.
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