Ways to reduce your IHT liability

“IHT is a voluntary Tax, paid by those who distrust their heirs more than they dislike the Inland Revenue!” – Lord Jenkins

Inheritance Tax (IHT) is usually payable on an Estate in the event of someone’s death. The current IHT threshold, also known as the 'Nil rate band', stands at £325,000. If your overall Estate is above this level, any excess amount will be taxed at 40% (although there are some exceptions in respect of charities etc).

Since October 2007, any late spouse’s or civil partner’s unused nil rate band can be transferred to the second spouse or civil partner when they die. This will mean that currently on second death the IHT threshold will be £650,000.

Example – Husband & Wife

Private property	£900,000
Bank accounts	£50,000
Investments (incl. ISAs)	£200,000
Other assets (e.g. cars)	£25,000
Total assets	£1,175,000
Combined Nil rate bands	£650,000
Liable to IHT	£525,000
Taxed at 40%	£210,000	tax liability to pay

               

To find out how to reduce your potential IHT liability, Ward Williams Financial Services Ltd will be holding a free seminar on Thursday 27^th February 2014 at Wentworth Club  – if you would like to attend please telephone us on 01344 624114 and speak to Clare or Hannah to reserve a place.