When an individual passes away, Inheritance Tax (IHT) is charged on the total value of the chargeable estate in excess of £325,000 – or £650,000 for husband and wife. With an increase in property values over the last few decades, Inheritance Tax is an area which could give rise to unexpected liabilities. At Davisons we can provide expert planning advice on the mitigation of potential inheritance tax liabilities.
Further relief will soon be available to exempt the transfer of the family home to direct descendants. The relief is to be phased in from 2017 and will exempt up to £175,000 per person - or £350,000 for a married couple. The relief will be restricted for estates worth over £2 million. As the legislation does not take effect until 2017 it is possible that changes may be made before it comes in.
Although relief is available on some Business assets and Agricultural Property, the rules are very complex and without careful planning, assets you may think are exempt could in fact become liable to tax if your affairs are not structured correctly.
Davisons have a specialist tax team who can offer tax advice and guidance, suggesting ways to offset and mitigate any inheritance tax (“IHT”) liability of your estate - planning and preparation can be vital!
Options available and factors to consider include the following:
- Gifts & Transfers
- Pensions/Life Assurance/Bonds written into Trust
- Help with Drawing up a Will and ensure that this is as Tax efficient as possible
- Life Cover
- Deeds of Variation
- Examination of private limited company share structures to ascertain the advantages of any share reorganisation
- Planning in respect of the family home
- Maximising the use of the nil rate band
- Consideration of lifetime gifts
- Ensuring that all pitfalls are avoided e.g. Gift with Reservation of benefits
- Making full use of exemptions and lower tax rates on lifetime transfers
- Optimising lifetime transfers between spouses
Effective IHT planning can help to protect your current wealth and minimise the tax liability due on your estate. Every situation is different and individual advice should always be sought. Taking into account your current situation and your anticipated future needs we can help to create a plan to provide reassurance to you and to those who are important to you.
Important Note: This is generic information and not individual tax advice.
If you require any further information, please contact us on 01769 572404 or e-mail IHT@davisons-uk.com