Having worked hard all your life for your family, saving for their future and paying your taxes, it is not surprising that most people would rather not needlessly pay Inheritance Tax (IHT).
We strongly believe most people should be able to ensure that their estate passes with very little or no tax payable. However, without taking action, the Chancellor of The Exchequer may get more of your wealth than your children or other heirs when you’ve gone.
If your home or assets are worth more than £325,000, there may be a tax bill attached of 40%.
During 2014 families lost £3.8billion, often unnecessarily, in inheritance tax, up by over 11% on the previous year and it’s not hard to see why…
According to the latest report from the office of national statistics, UK average house prices increased by 9.6% over the year to March 2015 and 8% in the previous year to March 2014. This has resulted in tens of thousands more middle-income families being drawn into paying a levy once intended for the wealthy. Conversely, many of the wealthy plan for IHT effectively, whereas middle-income families are less likely to seek out advice.
IHT was a hot topic running up to the election. To attract voters, the Conservative party made a pledge to change Inheritance Tax to make it less punitive - so what’s changed… or likely to?
In a nutshell not a lot and nothing yet, the new government has no plans to scrap what is, in effect, the ultimate wealth tax. However, it is proposing to give an additional allowance of £175,000 per person, from April 2017, to married couples and those in civil partnerships where they are transferring property. Of course, this provision is subject to the government passing appropriate legislation, which should also give us more details of its operation.
New pension freedoms brought in before the election can for some be used to great effect to mitigate IHT, there are however many ways to safeguard your family's wealth from inheritance tax.
Now has never been a better time to put a plan in place, as the effectiveness of IHT planning usually becomes more difficult with age.
The simplest way to find out if you can eliminate inheritance tax is to speak to a financial planner, preferably one who is independent and from a chartered firm, which is the highest qualification in the industry. This initial consultation should always be free of charge and without obligation and should enable you to understand your options.
You can also get a free guide here which sets out the details of inheritance tax and some of the measures you can take now to lower future inheritance tax bills.