So, you work hard all your life, paying all the different types of taxes required, and just when you close your eyes to depart this world, wanting to pass your hard-earned assets onto your loved ones, the Government steps in again and decides they want a slice.
The slice they want though is a rather large one. Any accumulation of assets you own over the current Nil Rate Band of £325,000 (2021/2022) carries an Inheritance tax (IHT) of 40%.
IHT is stated to be one of the most overpaid taxes in this country, and the one where there are the largest amount of options.
There are some benefits to being married though, as any gifts to a spouse are tax exempt, so in theory you could pass £650,000 (£325,000 x 2 =
£650,000) to your family with no 40% tax charge. This is not possible for those that are not married, so forward planning is very important.
Along with the Nil Rate Band you also have the Main Residence Nil Rate Band which is currently £175,000 each, but tapering on assets over £2 million. This could mean for a married couple they could have a total estate of £1 million and pay no tax. Advice does need to be taken though as there are specific rules around this and not every beneficiary is able to receive this allowance.
A million pounds does sound like a large amount of money and it is, but with the value of houses continuing to grow, more and more people are finding that they are edging closer to tipping over the threshold.
If there is enough time to plan then this can be the most avoidable tax that anyone has to pay but the detail of the planning is what becomes important. Just by planning in advance you can avoid a good part of this tax.
So, you work hard all your life, paying all the different types of taxes required, and just when you close your eyes to depart this world, wanting to pass your hard-earned assets onto your loved ones, the Government steps in again and decides they want a slice.
The slice they want though is a rather large one. Any accumulation of assets you own over the current Nil Rate Band of £325,000 (2021/2022) carries an Inheritance tax (IHT) of 40%.
IHT is stated to be one of the most overpaid taxes in this country, and the one where there are the largest amount of options.
There are some benefits to being married though, as any gifts to a spouse are tax exempt, so in theory you could pass £650,000 (£325,000 x 2 =
£650,000) to your family with no 40% tax charge. This is not possible for those that are not married, so forward planning is very important.
Along with the Nil Rate Band you also have the Main Residence Nil Rate Band which is currently £175,000 each, but tapering on assets over £2 million. This could mean for a married couple they could have a total estate of £1 million and pay no tax. Advice does need to be taken though as there are specific rules around this and not every beneficiary is able to receive this allowance.
A million pounds does sound like a large amount of money and it is, but with the value of houses continuing to grow, more and more people are finding that they are edging closer to tipping over the threshold.
If there is enough time to plan then this can be the most avoidable tax that anyone has to pay but the detail of the planning is what becomes important. Just by planning in advance you can avoid a good part of this tax.
You work so hard all your life, pay numerous taxes along the way and then on your last breath HMRC come and take a chunk. How is this fair?
