To effectively pass on your hard-earned money and property to your beneficiaries after you die, you need to make plans while you’re still alive. Making a will is a good start, however you can do more.
The late Lord Roy Jenkins of Hillhead in a House of Commons debate, 19 March 1986, famously said ‘Inheritance Tax; – it is, broadly speaking; a voluntary levy paid by those who distrust their heirs more than they dislike the Inland Revenue.’
In most cases inheritance tax (IHT) is payable on death, although a “transfer of value” creates the potential liability – not death itself. Therefore, in certain situations IHT could be due during your lifetime.
To check your potential for Inheritance Tax after your death, just add up the total value of all of your wealth e.g. your house, car, investments, any life assurance not written in trust; basically everything. The first £325,000 of your estate is actually taxed at 0% (the IHT nil rate band) anything over this amount is taxed at 40%.
An additional ‘Residence Nil Rate Band (RNRB)’ of £100,000 per individual was introduced from April 2017 increasing to £175,000 by 2020/2021. This can be claimed where a property is being passed on death to a direct descendant (children and or grandchildren). This will gradually be clawed back where your estate exceeds £2 million.
IHT and estate planning is a complex area and could involve the use of:
However, through careful planning there is a good chance of achieving something worthwhile. Get in touch today and find out how Premier could help you.