It’s estimated the government’s decision to freeze the Inheritance Tax threshold for another 6 years means that a million more families will be caught by the tax.

Currently the Inheritance Tax threshold is £325,000 for individuals and up to £650,000 for married couples or civil partners.

HOW DOES INHERITANCE TAX WORK?

If your estate ie property, shares, savings, possessions etc is below £325,000 in value Inheritance Tax is not payable if you are single.

If you are married or a registered civil partner Inheritance Tax can become payable on estates greater than £650,000 in value. HOWEVER this may be dependent on how the assets are owned and/or whether you have a Will.†

Should your beneficiaries inherit above these limits there will be a 40 per cent tax rate applied to the excess.

WHAT CAN BE DONE TO AVOID INHERITANCE TAX?

There are a number of options available to reduce or avoid Inheritance Tax. Here are a few:

• MAKE A WILL – even if you have a small estate. If you do not have a Will the State sets out who will inherit what you own. This is likely to go against your wishes in addition to being a non tax-efficient distribution of your assets. Read more about Wills here or please contact us for assistance.
• GET MARRIED! If you leave everything to your spouse in your Will, on the death of the first spouse their estate will not pay any Inheritance Tax. A couple with assets of up to £650,000 in value would see their relatives not paying any Inheritance Tax on the death of the second souse provided they had made Wills setting out these wishes. Please contact us to find out more.
• SET UP A TRUST.Trusts can help you preserve Inheritance Tax exemptions and reliefs while potentially keeping your assets safe for future generations. Read more about Trusts here or please contact us for assistance.
• USE YOUR ANNUAL EXEMPTION. †You can give away up to £3,000 a year and you can also carry over any of your unused annual exemption from the previous year. These gifts are exempt from Inheritance Tax when you pass away.
• You can give away as much as you like each year from your income provided it is affordable and does not cause you financial hardship.
• MAKE GIFTS TO YOUR BENEFICIARIES NOW. You must survive the gift by seven years or else it may not work as effectively. Please contact us to find out more.

With careful planning many people should not have to pay Inheritance Tax.

Please call us to make an appointment on 020 3128 7081 or book a consultation online here.

Ashton Grace; leading specialists in Will Writing & Estate Planning. Our consultants serve London and are happy to meet with you to discuss your requirements and set out your options.