Let’s dispel a myth right here and now. You don’t have to be rich for your estate to be subject to Inheritance Tax.
Given the choice, where would you like your life savings to go?
Inheritance Tax is the tax that is paid on your ‘estate’. Broadly speaking this is everything you own at the time of your death, less what you owe. It’s also sometimes payable on assets you may have given away during your lifetime. Assets include things like property, possessions, money and investments. Inheritance tax may also be payable on certain lifetime gifts.
The rates of Inheritance Tax are 0%, 20% and 40% for everyone. The tax is paid by the estate – and is deducted from the estate on death – so Inheritance Tax is relevant whether you stand to gain an inheritance or you plan to leave one.
Currently Inheritance tax may be applied to everything you leave over £325,000 (2021/2022).
See for yourself what it might include:
your investments and savings, (your ISA's may be exempt)
your home and car
your furniture and personal effects
the proceeds of your life insurance, (unless it is written in trust)
How we could help
We have considerable experience in the design and implementation of IHT mitigation schemes for our clients. Some of these can be complicated but there are also some basic inexpensive steps, which can create immediate benefits in the majority of cases.
Some are only applicable to married couples and civil partners but there are also steps that single people should take. The vital feature is that in mitigating the tax liability, you should not risk your lifestyle by reducing income, access to your capital or, in giving away your property, lose the right to remain living there.
(opens a new window)
Levels, bases of and reliefs from taxation are subject to change and their value depends on individual circumstances