Will you fail to plan your way out of Inheritance Tax?
With inheritance tax receipts exceeding 5bn last year, it is clear that the introduction of the Residence Nil Rate Band has made little or no difference so it has to be one of the most hated taxes in the UK.
Are you aware that it is rarely a burden on the wealthy because theyve done their homework and planned their way out of it? Yes the rules are complicated but there are a number of simple and straightforward tips to follow given some good upfront advice, so what are you waiting for?
Oh, you dont think your estate will pay inheritance tax? If you have done the sums that may be true. Some practical points for you to consider:
What harm would it do to get a second opinion?
Have you thought about what effect your estate will have on your beneficiaries estates? The gift of your inheritance will probably be the biggest windfall they get in life. You could be giving them an inheritance tax problem when you die, so head it off now whilst you are alive.
Do you need all of the money you have in the bank? If you dont, why not pass some of it on early and see your chosen beneficiaries enjoy your gift of kindness. You might enjoy seeing their lives enhanced.
If you dont get on that well with all of your children, or you think a divorce or bankruptcy might be on the cards, you can gift some money now into trust, it will help them in the future when the timing is right and you can put your own terms in place on how the money is used, your trustees will manage and control this for you, well after your death.
The current chancellor ordered a review of inheritance tax last year, and whilst none of us can be sure what the outcomes may be, what is certain is that, by now, another year has passed us by. The seven-year gifting rule still applies to potentially exempt transfers i.e. passing on assets over the 3,000 annual gifting limit per tax year. If you had done something about it this time last year, you would only have to survive 6 years for that gift not to be subject to inheritance tax. As it is, you still have seven years to go from the date of the gift, when will that be?
If the current system is fit for purpose, Ill eat my hat! think I’m safe…
If you have one of the 5% of estates that will pay inheritance tax, please consider doing something about it! If you are not happy about paying tax whilst you are alive, why are you happy to pay it on death? It doesnt make sense.
The 325,000 Nil Rate Band has not changed for 10 years so it is no wonder that the number of estate caught by inheritance tax increased by nearly 60% over the 6-years to 2016/17 and the amount collected doubled in that year to 4.8bn.
If you dont know the rules about inheritance tax, we would love to advise you, please contact us for help.