Reducing Your Inheritance Tax Liability
Here at TAG Accountants Group, we see an increasing number of clients finding themselves with what could be described as a potential inheritance tax “time bomb”.
How is Inheritance Tax calculated?
When you die, HMRC must be informed of the worth of your estate. Any debts you had are then deducted to arrive at your estate’s value and it is this value that will determine whether any Inheritance tax (IHT) is due. IHT is now affecting more and more middle-income families and any increased tax burden reduces the amount available for distribution and thus has a negative fiscal impact on any beneficiaries (such as offspring) who inherit.
Death and taxes, life’s only two certainties…
Even those who have paid tax throughout their working life and gone on to accumulate assets for the benefit of future generations can end up with the Government grabbing a sizeable chunk – some 40 percent of anything over the IHT nil-rate band of £325,000 for individuals and £650,000 for married couples!
Will the new ‘Main Residence Band’ help?
A new main residence band is being introduced meaning that by 2020 married couples will be able to pass on their home up to a value of £1 million without any IHT bill. It is important to note that this provision provides no additional shelter for any other assets and only covers the “main” residence where the recipient of that home is also a direct descendant
It always helps to plan ahead!
Many of course believe that they will not have to contend with IHT, but following any inheritance that situation can change very quickly, so an annual tax review is worthwhile.
And yet, by undertaking advanced tax planning, it may be possible to avoid paying IHT altogether. As the rules surrounding IHT planning are complex and it always pays to get professional tax planning advice and of course make a Will.
Don’t incur an unnecessary Inheritance Tax liability
TAG’s Managing Director Mr. Shaun Philpott suggests that, in the first instance, it is vital to list any relevant assets and debts to determine whether a potential IHT liability exists. From there, by planning ahead, it is usually possible to develop strategies (such as Gifting) that can mitigate or possibly even negate a future IHT liability.
So, if you would like more clarity on your IHT position, we can certainly help you with that!
Call TAG Accountants Group now on 01902 783172 or, click HERE to book an appointment with one of our specialist tax advisors to see how we can help you protect more of your assets and avoid your children’s future wealth being seriously impacted.
Just don’t wait until it’s too late!
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