Wednesday 14 June 2017

Easing the burden of IHT



Inheritance tax (IHT) is charged on your taxable estate at 40%. Before you look to offset IHT, however, it is important to establish what is likely to accumulate as a potential liability. For most people, the key contributor to their estate will be the value of their home and, even if this lies below the IHT threshold, other elements can push an estate over the limit. For example, although Individual Savings Accounts (ISAs) shelter investors from capital gains tax and income tax, they are not sheltered from IHT.

Nevertheless, there are steps you can take, particularly if your liability is relatively small. Many people do not realise, for example, that they have an annual exempted amount that they can gift to someone. At £3,000 per year, this could go some way to reducing the overall estate.

For the tax year 2017/18, the IHT nil-rate band stands at £325,000 for individuals and – with the option to transfer any unused threshold to a spouse or civil partner – a total of £650,000 for legally joined couples. Moreover, an additional “residence nil-rate band” (RNRB) of £100,000 per person was introduced in April 2017.

Looking ahead, as the Government looks to close potential tax loopholes, it is important to seek expert advice on how you can ease the potential burden of IHT.

Levels and bases of reliefs from taxation are subject to change. The FCA does not regulate some forms of IHT planning.



For more information please do not hesitate to contact the team at Ward Williams Financial Services Ltd on 01932 830664 or by email on wwfs@wardwilliams.co.uk.

No comments:

Post a Comment