Inheritance Tax is a tax on the value of a person’s estate on death and on certain gifts made during their lifetime. Inheritance tax is currently payable at a rate of 40% if a person has assets worth over £325,000.00 at the date of their death.
Here are our top tips to reduce your Inheritance Tax bill:-
- Review your will – Your solicitor will be able to advise you of the most tax efficient way to write your will. This will ensure you make the most of any Inheritance Tax reliefs which are available in your particular circumstances.
- Marry your partner – There are a number of Inheritance Tax reliefs that are available to gifts made on death to a spouse or civil partner. These exemptions are not available where you merely live together, regardless of how long you have lived together.
- Life Insurance – If you have Life Insurance Policies ensure they are written in trust for your chosen beneficiaries. By doing this the policy will not be included in your estate when calculating the Inheritance Tax that is payable.
- Make Gifts – You can currently give away £3,000.00 each tax year, absolutely free of Inheritance Tax. If you make a gift of more than £3,000.00 you must survive for seven years for the gift to be free of Inheritance Tax. You can also make gifts of your excess income, regardless of how much it is.
- Discounted Gift Trusts – These trusts allow you to transfer money outside of your estate whilst providing you with an income. Seven years after setting up the Trust the whole of the Capital Amount will not be included in the Inheritance Tax calculation and neither will any growth. However, once you have made the gift you will only have access to the income so you must be sure you will never need the capital amount.
For further advice in relation to inheritance tax planning, updating your will or indeed any aspect of wills and probate, please get in touch with us.