Inheritance tax (IHT) is levied on your estate when you die and pass your assets to your beneficiaries. It is calculated based on the value of your total assets but with the first £325000 being nil rated so essentially free of IHT. Assets over £325000 suffer tax at 40%.
IHT planning can help to mitigate the impact of the tax levied and reduce the potential tax bill.
It must be undertaken carefully as several approaches that are commonly thought to reduce IHT do not in fact work. Large estates need to be looked at thoroughly and all the potential IHT planning options fully considered.
These generally include:
- Giving assets away during your lifetime – this might be to friends or family or Trusts and Charities.
- Make provision for the IHT bill by use of life assurance to cover the estimated liability.
If you believe Inheritance Tax may be an issue for you, we can help you plan ahead about how to try to mitigate against or cover the cost of the tax.