By planning ahead careful you can ensure your finances are in the best shape possible for when your family has to deal with paying your inheritance tax bill. Inheritance tax is payable on all estates which are worth over £325,000. This is the inheritance tax threshold for individuals living in the UK and for the year 2012/13 until the year 2014/15.
There are a number of ways you can plan in advance to try and reduce the inheritance tax bill which will be due on your estate.
– Transfer your threshold: It is possible to transfer your ‘nil band rate’ over to your surviving partner. This applies to married couples and couples in civil partnerships. The nil band rate is transferred over on the death of the second partner, this can mean the estate is exempt of tax up to a value of £650,000 depending on the situation and depending on whether the first partner used any of their tax exemption. Furthermore, married couple and those in civil partnerships can transfer unlimited amounts of money/property to their partner in their lifetime and it will not be subject to inheritance tax.
– Gifting: gifting works in different ways depending on the nature of the gift. In some cases gifts made to family members or other parties within 7 years prior to the death of an individual will still be taken into account when calculating the amount of inheritance take that is due. Any gifts made more than 7 years prior to you passing away will be exempt from inheritance tax.
– Giving your home away: you can give your home away to your children, however if you are still living in it for the years after you have gifted the property inheritance tax will still need to be paid on the property.
– Inheritance tax relief for agricultural property: those passing on agricultural property will pay either no inheritance tax or a reduced amount of inheritance tax. You can also receive tax relief for woodland.
– Business assets relief: you can again receive a reduced tax bill if you are handing on business assets such as stocks, shares and property.
– Charitable donations: in April 2012 the government introduced a scheme that allows for your inheritance tax bill to be reduced to 36% (as opposed to 40%) if you decide to leave 10% or more of your estate to a charitable organisation. Certain charities qualify to give you this exemption, not all.
Give as a call at Roskell Davies if you need advice regarding Wills, probate and inheritance tax. All initial enquiries are offered completely free and no obligation just call us on 0800 142 2901 or fill in an online enquiry.