The Benefits of Inheritance Tax Planning

Most people want to leave as much of their estate as possible to their family, friends or other recipients when they pass on rather than give the majority of it to the tax man. While it may be something that you don’t want to think closely about right now, ensuring that you have a will made out and have the right plans in place is a good idea.

The first thing you need to consider, of course, is whether you’re likely to pay inheritance tax at all. Currently, if you are single, the level at which your estate is liable will be over £325,000. If you are married it’s £650,000.

While this may seem a lot, if you own your property that alone can take up a large proportion of the tax allowance, particularly if you live in certain areas of the country. The tax rate is currently 40% once you get over the threshold so it’s no surprise that many people are concerned about their assets after death.

Don’t forget also that these levels can change at any time if the Government decides to change the rules in the future.

benefits of inheritance tax planningThe prime benefit of inheritance tax planning is to reduce how much you are required to hand over to HMRC when you die. It can be a complicated issue, especially if you have a number of assets, and understanding the law and getting the best advice is important.

There’s no doubt that most people see inheritance tax as more than a little unfair because it seems they are being taxed more than once on what they have already earned and accrued over the years. It can also have major consequences if you get it wrong. If much of your assets are tied up in the value of your house, for example, a hefty tax bill once you die could leave your loved ones faced with the prospect of having to sell the property to cover that amount.

The good news is there are numerous ways to reduce your inheritance tax bill. One is giving money to family and friends, something which will not be counted on your tax payment as long as you survive more than seven years after the gift. You might want to give money away to charities or political parties which are inheritance tax free. You may decide to put money or assets into a trust for your grandchildren, for example – either setting it up now or including it as part of your will for when you die.

If you want to make sure that more of your estate goes where you intended it to rather than the tax man, getting professional legal advice is important from the outset. It’s sensible to do this sooner rather than later and will ensure you are immediately covered should anything unforeseen happen. An inheritance tax lawyer will be able to look at the value of your entire estate and suggest ways in which you can cut down the amount of tax that will need to be paid.

At Forster Dean we can advise ways to reduce your tax burden and ensure that you stay on the right side of the law at the same time. Contact our experienced team today to find out more.