Inheritance Tax Planning in Bournemouth
Inheritance Tax, or IHT as it is commonly known, is due on an estate where the assets exceed a certain threshold, known as the 'nil rate band'.
Large numbers of 'comfortable' people are finding that the long-term historical increase in property values means their estates may be liable for IHT when they die.
The full rate of IHT is 40% on the estate value in excess of the threshold, which has been frozen at £325,000 until April 2015. Taxable gifts made up to seven years before death are added back into your estate and tax is calculated on the inclusive value.
If you are looking to minimise your IHT liability, early planning is vital. Most gifts made more than seven years before death will escape tax. There are several IHT reliefs and exemptions which may be available to you if the gift is otherwise chargeable, including the 'annual exemption' of £3,000 and gifts to qualifying charities.
Individuals who leave 10% or more of their net estate to charity may be liable to pay a reduced inheritance tax rate of 36%.
Assets may be transferred between spouses and civil partners. Such transfers will be exempt from IHT. This may mean that in the majority of cases the nil rate band available on the first death has not been fully utilised. As a result the unused proportion of a deceased partner's nil-rate band can be included in the available nil-rate band on the second death. It is important to note that the executor or personal representative handling the estate is required to send the appropriate forms and supporting documentation to HM Revenue & Customs.
Paget Reid York in Bournemouth can advise on a range of IHT planning strategies, which may include:
- Making the most of reliefs, including business property and agricultural property relief
- Making the best use of exemptions
- Valuing your business
- Life assurance policies
- Ensuring that your Will and estate plan are tax-efficient and up-to-date
- 'Generation skipping', so your estate passes directly to your grandchildren
- Using trusts to manage your assets and any income generated
- Lifetime gifts of assets
You can reduce the liability to IHT by implementing a lifetime programme of IHT and estate planning. This will not only protect your family's wealth, but it will also help to ensure that your estate is distributed in accordance with your wishes.
Paget Reid York can assist with all aspects of tax planning, from helping to calculate your IHT liability, to dealing with forms for probate, and providing proactive strategies to increase your business and your personal wealth.
Contact Paget Reid York today for further inheritance tax information and planning strategies in the Bournemouth area.