Inheritance tax (IHT) was once famously described as ‘a voluntary levy, paid by those who distrust their heirs more than they dislike the Inland Revenue’ by Roy Jenkins, a former Chancellor of the Exchequer.
IHT is currently levied at 40% on the value of an estate above the tax-free threshold, which has been frozen at £325,000 since 2009. Married couples and civil partners are entitled to double the allowance, passing on assets to their children or other relations worth up to £650,000 before a tax charge is triggered.
How will this change?
The Government have added a ‘family home allowance’ eventually worth £175,000 per person in addition to the existing £325,000 tax free allowance from April 2017. From 2020/21 individuals will be able to pass on assets worth up to £500,000 to descendants – including a family home, without paying any IHT at all.
However, statistics show the total United Kingdom HMRC inheritance tax receipts in 2016/17 was £4.8bn and the overall trend is upwards. There are a number of allowances and exemptions and this article does not allow me the space to cover these in full detail however, the main allowances include:
- Gifts and allowances
- Annual gifting allowance
- Small gift allowance
- Gifts out of normal income
- Other exempt gifts
- Gifts to charity
- Writing a Will
- Giving money away
- Using Trusts
- Investing to reduce your liabilities
- Life Assurance cover
What can I do next?
As a regulated independent firm of financial advisers, we can help you structure your assets as tax efficiently as possible.
If you would welcome a meeting, without cost or obligation then please do not hesitate to contact us. After all, what have you to lose? – other than 30 minutes of your time…
The value of tax relief depends upon your individual circumstances. Tax laws can change. The Financial Conduct Authority does not regulate the estate planning or tax advice. The value of your investments can go down as well as up and you may not get back the full amount your invested. Past performance is not a reliable indicator of future performance.
By Ivan Lyons, Director, Investment Solutions, Worthing
Contact Investment Solutions: Grafton House, 26 Grafton Road, Worthing, BN11 1QT. 01903 214640 or send an email to Ivan at: email@example.com or visit www.investment-solutions.co.uk