Inheritance Tax is one of the biggest tax bills many people will face. It’s therefore important to take time to consider who you want to inherit your wealth and personal effects, and how to pass them on in the most tax-efficient way.
In our recent webinar, Peter Webb, Head of Tax Advisory at The Fry Group, discussed the proactive tax planning steps you can take to safeguard your wealth for your chosen beneficiaries rather than HMRC. He also spoke about the importance of keeping your Will up-to-date to help ensure that your estate passes on to those who you want it to, and without unnecessary Inheritance Tax charges.
Missed the webinar?
Watch it here
The webinar explored who Inheritance Tax affects and how it’s charged. It also offered some information about how to understand the Nil Rate Band, and how Inheritance Tax applies to any gifts you make. There was also some information shared about simple ways in which you can reduce your Inheritance Tax bill.
It’s clear that Inheritance Tax (IHT) is the most punitive weapon which the UK tax authorities have available. And it’s worth always remembering that it’s somewhat an unfair tax given you’re being taxed on something you’ve already paid tax on! But you can takes steps to reduce your IHT bill, and planning ahead in this area can be very helpful.
As well as making use of various allowances which are available, there are several other ways in which you can reduce or eliminate IHT including:
- Spend it – you can choose to enjoy your wealth personally rather than leaving it in your estate
- Gift it away – gifts to friends and family, or made regularly, can lessen your bill
- Consider insurance – there are schemes which can help fund a future IHT bill
- Invest it – a variety of investments are IHT friendly
There are different rates of IHT, although most of us are under the allusion that it’s just a 40%. But this isn’t the case; in fact a 36% charge applies if 10% of your estate is left to qualifying charities, and a 20% is charged for gifts into some types of trusts.
And don’t forget that if you’re not domiciled in the UK then IHT is treated quite differently – effectively it’s only your UK assets which are involved. So there’s a significant advantage in terms of IHT if you do have a domicile somewhere else.
To discuss any aspects of your tax planning, including making or updating a Will and reducing Inheritance Tax, please get in touch with your nearest office.
