Inheritance Tax (IHT) is a charge placed on a Deceased Person’s Estate before it has passed to the person’s Beneficiaries. National polling has revealed that IHT is the nation’s least popular tax. The Government still rakes in £Billions per annum from unsuspecting families !
- IHT has been around since March 1986.
- IHT is charged at a rate of 40% of Assets held by the Deceased exceeding the Value of their Nil Rate Band (£325,000 for a Single Person; £650,000 for a Couple).
- It is exceedingly rare for Any Estate to be Exempt from IHT.
- Giving Gifts to your Loved Ones while you are alive doesn’t always make those gifts exempt from IHT.
- There have been multiple high profile cases of celebrities avoiding IHT, either partly or entirely, through careful prior planning.
Why is it so Hated ?
It can be seen as, in essence, a ‘death tax’ enforced on those who have not planned ahead to accommodate it when planning for their Loved Ones’ Inheritance.
Is it going to Affect me ?
The answer is ‘probably’. If your Estate exceeds the previously mentioned thresholds – including your Home, Savings and Possessions – you will be liable to IHT. In the Chilterns and Thames Valley area many people own a home valued at least to the IHT nil rate threshold. That combined with other savings and assets will bring many families into IHT liability.
Can it be Avoided ?
Yes, but it is rather difficult. Several high profile cases of total IHT avoidance have been documented over the years, such as George Harrison, who avoided a Bill of around £40 million, as well as both Margaret and Dennis Thatcher. Instead it is recommended to ‘reduce’ the impact IHT will have on your Estate.
Reducing the impact of IHT
Firstly it’s vitally important to Make a Will to record on paper your Wishes and how you would like your Estate to be distributed. You may also wish to create Home or Estate Protection Trusts which have Multiple Benefits. Donating to Charity 10% or more of your Estate reduces IHT liability to 36%.
Getting the right Advice
As specialists in Inheritance Tax and Estate Planning Advice, Accord Legal Services are here to help you Protect your Estate for your Beneficiaries. Your local Consultant in the area covered by The Foxy Deer is Oliver Kent MA (Cantab.) He is available for Free Home Consultations in the area. Please visit his site here.