How little Inheritance Tax do you want your kids to pay?
Start planning nowWe’re often asked about inheritance tax. Specifically, how much will people’s children have to pay, what counts as assets, what are the thresholds with property prices rising so fast and above all; how can the amount that goes to the government be reduced. Let’s face it, you’re taxed all your life, shouldn’t they stop when you’re dead? Ours is not to reason why. But we can certain try to help.
So how does it work? In a nutshell, according to the government, “Inheritance Tax is a tax on the estate (the property, money and possessions) of someone who’s died.”
When said death occurs, the Government decides how much your estate is worth, then deducts your debts from this to give the value of your estate. Your assets include but are not limited to:
- The contents of your bank account
- Investments, stocks and shares
- Any property or business/es you own
- Vehicles that you own outright
- Payouts from life insurance policies
Your estate will have to pay IHT at 40% on anything above the current £325,000 inheritance tax threshold when you die (or maybe less if you leave some to charity).
As of April this year, each person also has a family home allowance of £100,000 in addition to the existing IHT threshold.
This will allow individuals to pass on bricks and mortar up to a value of £425,000 to their children or grandchildren tax-free. Couples can combine this, potentially doubling their allowance. With house prices for the most part rising steeply, more individuals have become liable for IHT.
There is good news, however. There are planned increases to the levels over the next few years. IHT exemptions will rise incrementally from £425,000 to £500,000 over the next few years. Married couples can claim unused IHT from a deceased spouse, so can continue to double those amounts.
So, it’s not all doom and gloom, but you need to act sooner rather than later.
Start to plan now as your assets build. We can put together bespoke solutions tailored to your circumstances, ensuring peace of mind as you get older and more affluent, safe in the knowledge that your loved ones get the inheritance they deserve.
Let’s see what we can do to save money in the (hopefully very) long term. Call us on 01438 727141