If your total assets exceed £325,000, then if you were to die you might have to pay inheritance tax on anything in excess of that figure at the rate of 40%.
Money left to your spouse or to a charity is exempt from this tax. However if your assets are worth over £325,000 it would be sensible to discuss with us the effect that Inheritance Tax might have.
For married couples or civil partners , tax legislation states that if this £325,000 is unused or only partly used by the first of a couple to die, the survivor may take advantage of it on their death. Again we can discuss this with you if it may apply to your circumstances.
From April 2017, the Residence Nil Rate Band provides some individuals with an additional £150,000 (rising to £175,000 in April 2020) of tax free allowance. Broadly speaking, in order for the allowance to apply, individuals/families must pass their residence down to direct descendants who can include children, step-children, adopted or foster children and grandchildren.
In all cases and circumstances, our Solicitors can advise on how best to maximise your estate for your loved ones who inherit.
The first stage of effectively mitigating Inheritance Tax is by Making your Will. However this is only the basis of good tax planning. It is important to look at all the assets and how they are owned. In addition, efficient use of Life Insurance and Pension Policies is often a simple way of offsetting the tax bill.
When looking at your Inheritance Tax position, it is always important to take into account other factors which may affect you in later life. Care Home Funding should always be considered as in many circumstances, reducing your potential Inheritance Tax liability could adversely affect your ability to pay future care costs. Careful consideration therefore needs to be given in order to strike the right balance between the two.