Inheritance Tax Planning

Inheritance Tax (IHT) – A voluntary tax?

Roy Jenkins, one–time Chancellor of The Exchequer, is reputed to have said that “it’s a tax paid by those who love their family less than they do the taxman”? Whether true or not, what is true is that this form of taxation can often be reduced, or even avoided altogether, through careful planning. Another truth is that the amount of inheritance tax being paid is increasing year on year and now exceeds £2.5 BILLION! Do you want your family to add to this? – or will you try to pass on to them as much as possible – legally?

How?

Each adult has what is known as a ‘nil rate band’ (NRB) currently (08/09) standing at £312,000. This is still a lot of money but, with today’s rapidly rising property prices, it may represent little more than the home in which you live. What about other possessions – cash, investments and perhaps a second property or an expected inheritance? (Have your parents taken steps to help you offset the tax that you might be called upon to pay – at any time?). Write and keep a will updated – it may be that you can save up to £120,000 by using a suitable trust to safeguard your partner’s NRB. Try to use the allowances legally available – capital of up to £3,000 each year plus any number of smaller gifts to other people, and £5,000 in consideration of the marriage of a close relative. Of course, you are allowed to give away whatever you like – however there’s a ‘but’, and the but is that everything over your allowances continues to be assessable to IHT for 7 years. There are ways of arranging your finances ensuring ongoing use of your money whilst minimising your family’s likely tax bill.

Why not call CamOuse to find out how you might reduce your inheritance tax legacy – give it to your family, not to ‘you know who’!

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