Guide to UK Inheritance Tax

Think ahead and plan for the future.

Property prices rose from the early 1980 through to 2007. However there are still a large number of families that could face large inheritance tax bills.

Planning ahead will allow to you understand the scale of the possible tax and put into place actions to reduce the potential tax bill. The current IHT threshold for the 2010 and 2011 tax year is £325,000.

Having an up to date will can be used to reduce the possible IHT tax bill and will give a clear instruction to your estates executors.

If you do not have a will then the rules of intestacy will apply. This could mean that the person or people you would like to leave your estate to, might not benefit.

Gifts are treated in a number of ways for Inheritance Tax purposes. However, you only need to be concerned  about making gifts if you think your total taxable estate, including the value of any gifts you make, might exceed the inheritance tax  threshold when you die. If your estate is over the tax threshold, all or part of certain gifts might be added back into your estate to calculate the possible tax liability.

There can be serious tax implications if you gift your home away to your children or someone else, especially while you’re still alive. If you have gifted  your home away and you are continuing to live in it, your estate or the person you gave your home to might still have to pay inheritance tax on the property when you die, as well as other taxes.

You can also use a trust to pass assets on to others. Effective tax planning strategies can be used to substantially any inheritance tax your beneficiaries might have to pay.

We have a free publication available on inheritance tax planning. If you would like a copy please contact us.