Inheritance Tax (IHT) has become a big issue for so many individuals in the UK but the vast majority of people do not realise it. The value of your estate could have grown rapidly, and at the same time the financial threshold at which IHT is payable has risen more slowly.
The result is that the benficiaries of your estate may have to pay significant amounts of inheritance tax when you die. For a single person the threshold is £325,000 for the 2014/15 whereas the surviving spouse in a marriage could have an allowance of £650,000. The tax rate applied above the threshold is 40%. The tax thresholds have not been raised for several years whilst house prices in many parts of the country now exceed levels before the 2008 recession. For example, on an estate of £1M where a surviving spouse in a marriage has died, the beneficiaries would need to raise £140,000 to pay the tax due.
In addition, the tax has to be paid before the estate can be distributed.
Mitigation Unlike other forms of taxation, it could be argued that IHT is a voluntary tax, since the liability can be eliminated or significantly reduced by careful planning. This can result in all or the majority of your estate being left to your beneficiaries as opposed to the Treasury. AdvizerTech can provide you with the necessary professional advice.
Rules on Taxation The rules on taxation can change. Their value will depend on your personal tax position. The information on this website is based on our understanding of current legislation as of June 2014 and may be subject to change.
The FCA does not regulate Tax & Trust or IHT Planning