Inheritance tax – what is it and why plan for the future?

Inheritance tax is a phrase we might be familiar with but some of us might be asking ‘what is it?’ We might have heard it mentioned in the recent budget announcement. Or it might be something we have in the back of our mind but aren’t really sure how it applies to us.

We thought we would give a very basic overview of this type of tax and how it could affect you – or your family and loved ones in the future. 

What is inheritance tax?

Broadly speaking, this is a tax paid on the estate of someone who has died. An estate includes things like property (a home or other property), money someone leaves when they die and any other possessions they owned.

Does everyone pay inheritance tax?

No, not necessarily.

It doesn’t apply if the value of an estate is under the threshold of £325,000.

It also doesn’t apply if anything above the £325,000 threshold is left to a spouse, civil partner, charity or community amateur sports club.

If you give away your home to your children or grandchildren when you die, the inheritance tax threshold can increase to £500,000.

If you’re married or in a civil partnership, any unused threshold can be added to the surviving spouse’s or civil partner’s estate. This means their threshold could be as much as £1 million.

What rate is inheritance tax paid at?

The standard rate of inheritance tax is 40%. This is charged on the part of your estate above the threshold.

How is the tax paid?

Funds from an estate are used to pay this tax. This is arranged by your Executors.

How can Thatcher + Hallam help you with issues relating to inheritance tax?  

Inheritance tax can quickly become quite a complicated issue when you start considering how best to plan for the future. This is where a firm such as ours can help.

We can identify whether there is a potential for this tax to apply and we can discuss options such as lifetime gifts or how best to leave your estate under a will.

Want to know more?

We are hosting a free webinar, which anyone is welcome to join, on Thursday 18^th March at 10.30am. The webinar will look at issues such as inheritance tax planning and will address why it’s so important for all of us to plan for later life, no matter our age. For more information or to register to join the webinar click here.

Alternatively, if you’d like to speak to one of the team regarding this topic you can call us on 01761 414646 or click here and use our online contact form and someone will be in touch with you shortly.