There are only 2 strategies to avoid inheritance tax: (1) die poor, or (2) plan ahead! Until fairly recently, it was only necessary for the wealthy to plan ahead but with the nil rate band reducing in real terms year by year it is now increasingly the case that much of society needs to plan ahead.
Our specialist lawyers are recognised experts in all aspects of estate planning including:
It is important to note that inheritance tax can be complicated and, as a result, you should not take any action without seeking proper advice. There are severe penalties for breaking the tax rules or if incorrect or incomplete information is given to HMRC.
How much inheritance tax you pay depends on the value of your estate. There is normally no Inheritance Tax to pay provided the value of your estate is below the nil rate band threshold (£325,00) or you leave everything to a spouse, civil partner or charity.
You can pass on money, property or possessions as gifts without paying any tax, provided you survive 7 years after giving it to the recepient. If you die within the 7-year period but more than 3 years after the gift, having gifted more than the nil-rate allowance within the 7-year period, then the tax you pay is reduced.
Anyone can give away up to £3,000 a year and pay no tax. This is known as the annual exemption. In addition, small cash gifts of £250 are also tax free.
Another way of reducing how much inheritance tax your estate pays is making donations to charities. All gifts to charities are exempt from inheritance tax and if you leave 10% of your estate to charity, the inheritance tax rate is reduced from 40% to 36%.
We can guide you through inheritance tax planning, ensuring all practical advice on how to limit the amount to be paid on the assets you leave behind for family and friends.