Inheritance Tax or
IHT is a UK Government tax that can be payable when
a person dies or on certain lifetime gifts which are
not exempt or potentially exempt.
If you live in the UK your worldwide assets may be
subject to IHT. Husbands and wives are taxed separately;
however, there is no IHT on transfers between spouses,
provided the recipient is domiciled in the UK.
Rate of Tax
IHT is charged at 40% on death, and at 20% on certain
lifetime transfers. The first £312,000 is charged
at a nil rate unless you are making a transfer to a
spouse who does not live in the UK, when the limit is
£55,000.
With property values rising so dramatically over recent
years, many people now find their estate to be over
£312,000 meaning that tax is likely to be liable
to IHT where someone making a lifetime gift dies within
seven years of making the gift. The full rate of tax
is reduced depending on the time between the gift and
the date of death. If the gift, plus chargeable transfers
in the previous seven years, is not more than £312,000,
it is within the nil rate band and so there is no reduction.
This is a trap for the unwary; as many people believe
that this taper applies to all gifts.
The full implications of IHT are quite complex and
to make appropriate plans to maximise your assets requires
a full valuation of an individuals’ estate. With
the right advice and actions you can secure your estate
for your family and loved ones or optimise the assets
of a family member who may wish to provide you with
a gift for your future.
As experienced financial advisers we are perfectly
placed to help you with any query you may have on IHT
and we would be only too happy to carry out an assessment
of your estate so you can plan ahead and reap the full
rewards of your assets. |
