Inheritance Tax
Inheritance tax is a tax levied on the estate of a deceased person. It is payable on the value of assets and property left behind, above a certain threshold, before they are distributed to beneficiaries. Inheritance tax can significantly reduce the value of an estate, making it crucial to implement strategies to minimise its impact. Beavis Morgan understands the complexities of inheritance tax and offers expert guidance and planning to help you navigate this area effectively.
Inheritance Tax Support: Threshold & Rates
Inheritance Tax is a tax levied on the estate, which includes the property, money, and possessions, of a deceased individual. In most cases, there is no Inheritance Tax to pay if the value of the estate is below the £325,000 threshold or if everything above the threshold is left to a spouse, civil partner, charity, or a community amateur sports club. However, even if the estate is below the threshold, it may still be necessary to report its value.
If a home is left to children, including adopted, foster, or stepchildren, or grandchildren, the threshold may increase to £500,000 each. For married couples or civil partners, if one partner’s estate is worth less than their threshold, any unused threshold can be added to the partner’s threshold upon their death.
The standard Inheritance Tax rate is 40% and is only charged on the part of the estate that exceeds the threshold. For example, if the estate is worth £500,000 with a tax-free threshold of £325,000, the Inheritance Tax charged would be 40% of £175,000 (£500,000 minus £325,000).
Exemptions and Reliefs
In certain cases, the estate may qualify for reliefs and exemptions.
- Taper relief may apply to gifts given during the individual’s lifetime, reducing the Inheritance Tax charged on the gift.
- Business Relief allows some assets to be passed on free of Inheritance Tax or with a reduced bill.
- For estates that include a farm or woodland, Agricultural Relief may be applicable.
The executor of the estate is responsible for paying the Inheritance Tax to HM Revenue and Customs (HMRC) using funds from the estate. Beneficiaries who inherit the estate typically do not pay tax on their inheritance. However, they may have other tax obligations related to the inherited assets, such as rental income from a property received through a will. It’s important to note that individuals who receive gifts may have to pay Inheritance Tax if the total gifts exceed £325,000 and the giver passes away within seven years.
Planning and Mitigation
Effective estate planning is key to mitigating inheritance tax. At Beavis Morgan, we have a team of experienced professionals who specialise in inheritance tax planning. We stay up to date with the latest legislation and regulations to provide accurate and current advice. Our team will conduct a thorough review of your estate and financial situation, identifying opportunities to minimise your inheritance tax liability.
We will work with you to implement effective strategies tailored to your specific needs and goals. Our expertise covers a range of areas, including trust planning, estate restructuring, lifetime giving, and the utilisation of tax reliefs and exemptions. We will guide you through the process, ensuring that you understand the implications and benefits of each strategy.
How Beavis Morgan Can Help
By working with Beavis Morgan, you can have confidence in knowing that your inheritance tax planning is in the hands of knowledgeable and experienced professionals. We will help you navigate the complexities of inheritance tax, minimise your tax liabilities, and ensure that your assets are preserved and passed on to your chosen beneficiaries.
