Inheritance Tax planning
in laterlife
Inheritance Tax – Are Your Loved Ones Liable For A
Large
Tax Bill?
Many of us will have a strong idea of who we’d like to leave our estate and possessions to when we die – and that list of deserving people is unlikely to include the Taxman.
Yet if you’re single or divorced and the value of your estate is above £325,000 – or, if you’re married, in a civil partnership or widowed, above £650,000 – you could be liable for a 40% tax bill
on the excess. What’s more, your loved ones may be forced to pay this tax before they can inherit what you want them to have.
Your estate can be made up of all manner of items. Properties and cars are the more obvious possessions; but also your savings, investments and jewellery are included in the value of your estate. When you add all your possessions up, you might be surprised by how much they are collectively worth. It’s also worth noting that future price rises – for example to house prices – could push up your estate’s value even further.
There was talk that the change of Government in 2010 would see the
inheritance tax thresholds increased so only the very rich would be liable to pay it. However, the coalition Government announced in June 2010 that the existing £325,000/£650,000 thresholds would be frozen until at least 2015. If you believe you might have an Inheritance Tax liability, you can’t afford to delay addressing this potential issue.
The table below illustrates how much Inheritance Tax you could pay as a single or divorced person with no plans in place.
Inheritance
| Estate Value |
Taxable |
IHT Payable at 40% |
| £325,000 or less |
£0 |
£0 |
| £425,000 |
£100,000 |
£40,000 |
| £525,000 |
£200,000 |
£80,000 |
| £625,000 |
£300,000 |
£120,000 |
| £725,000 |
£400,000 |
£160,000 |
| £825,000 |
£500,000 |
£200,000 |
| £925,000 |
£600,000 |
£240,000 |
| £1,025,000 |
£700,000 |
£280,000 |
The table below illustrates how much Inheritance Tax you could pay if married, in a civil partnership or widowed with no plans in place.
| Estate Value |
Taxable |
IHT Payable at 40% |
| £650,000 or less |
£0 |
£0 |
| £750,000 |
£100,000 |
£40,000 |
| £850,000 |
£200,000 |
£80,000 |
| £950,000 |
£300,000 |
£120,000 |
| £1,050,000 |
£400,000 |
£160,000 |
The good news is there are steps you can take to reduce or even eliminate your Inheritance Tax liability – while in some cases retaining full control of your estate. Many of the options available are simple and cost-effective to implement. However, because individual circumstances can differ so widely, it’s recommended you seek professional advice to ensure you make appropriate plans.
Where to Begin? Getting Support and Guidance
While many of these potential solutions are straightforward to arrange, it’s strongly recommended you seek professional advice to ensure your individual circumstances are taken into account.
More on:
Types of Financial Advice
Retirement Planning
- Financial advice
Inheritance Tax
- Financial advice
Making a Will
Investing your money
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