Inheritance Tax or IHT is a 40% tax that can be applied to portions of your wealth, when you move to transfer it to your children as an inheritance.
HMRC’s total gains from IHT are expected to total around £2.3bn this tax year (2009/10).
Much of this tax could have been avoided, as IHT is known as the most avoidable tax of all.
Checking your current liability for IHT is a simple calculation based on the total assets in your ‘estate’, less your debts and liabilities.
You can check your IHT liability right now, using our new Inheritance Tax calculator.
The tax allowances for IHT are currently £325,000 for a single and £650,000 for a couple.
This may sound generous, but bear in mind that they apply to your total wealth, as contained in your ‘estate’.
Your estate consists of the value of your home/other properties, cars, valuables, savings, investments, and insurances, minus the value of your outstanding mortgage, loans and other debts.
However, good independent financial advice and a little IHT planning can reduce or eliminate altogether your IHT liability, in just a few steps.
For instance, an insurance policy giving £250,000 of cover could be written ‘in trust’, reducing the value of your estate by that amount, right away. That single step could well be enough to bring your estate’s total worth back within your IHT allowances, so that you avoid tax.
Our advisers are experts in using IHT exemptions and Potentially Exempt Transfers (PETs) to further cut your possible exposure to IHT.
You can check your IHT liability with our IHT calculator, or find out more with an online advice enquiry, or call us now on 0800 678 5929.
