ROBERTSONS & CRAWFORD LTD
Independent Financial Advisers
Inheritance Tax - how to make sure your beneficiaries keep as much as possible
Taxation of your estate on death was once the realm of the super rich. With the evolvement of our economy and the increase in value of fixed property over the years, this has become an area that many ordinary people need to pay attention to nowadays.
When you die, the government will levy a tax against your estate at the rate of 40% for anything you leave to a beneficiary, other than your spouse (or civil partner), over the current IHT threshold. In the case of a married couple, the IHT threshold can be transferred to the surviving partner so they have double the current threshold when they die, but any value in excess of this will be taxed at 40%, meaning your beneficiaries may receive substantially less than you had hoped.
There are ways to avoid this or reduce the value of your estate for Inheritance Tax Purposes, but this requires a complex analysis of your estate and often decades of planning to achieve. Assets can be transferred over your lifetime to beneficiaries and trusts but this does have ramifications should you ever need access to the donation.
Imagine you bought a house twenty years ago for £200,000 and it has now grown in value to £800,000. In addition to this you have accumulated other assets and investments to the value of £200,000 and imagine you want your children to inherit this when you die.
If you are an individual, the tax levied against your estate could be as much as £270,000. As this is more than the value of your other investments, it could mean your house would have to be sold in order to raise enough money just to pay the tax!
Our expertise can guide you and provide solutions to manage, reduce and plan for these taxes to make sure you pay what you must, but the absolute bare minimum.