In the tax year 2016/2017 the amount of Inheritance Tax (IHT) paid to HMRC was in excess of £4.7billion. Official bodies have also calculated that in the next five years this figure could increase by up to a third, this is a payment of up to £6.1billion.
The reason for this increase is a result of consumers, like yourself and I, not making provision for the fact that payment of taxes does not stop when you pass away. The biggest contribution towards this huge payment to HMRC is that people are no longer keeping a close eye on the value of their assets, in particular their properties, and as a result not taking advice on the array of lifetime planning options available to them.
For example, you may have purchased your property over 30 years ago for a figure less than £100,000.00. Should you obtain a valuation of your property now it could have more than doubled in value. Taking into consideration the frozen nil rate band for inheritance tax of £325,000.00; in the event that your property has a current value of £250,000.00 you are already closely approaching your nil rate band. This is of course only taking into consideration your property and you may be someone with several other assets such as savings, shares, investments, other property and assets. Once the total value of your estate has been calculated as at the date of your death, if your estate was valued at more than your entitlement under the nil rate band rules, your estate could face payments of 40% to HMRC for inheritance tax.
It is important to know that there are other allowances available to consumers which assist with inheritance tax payments however these come paired with several requirements which can often be reliant on the contents of someone’s Will.
So how do you reduce your inheritance tax bill before it is too late?
There are several options available to consumers and it is paramount that these are all explored. Edward Hands & Lewis offer independent advice on lifetime planning for the purpose of reducing your inheritance tax bill. Such actions could include provisions in your Will, trusts, ensuring you are aware of any tax reliefs available to you and lifetime gifting.
Thorough and effective lifetime planning can be a costly experience in some peoples’ eyes, however in the majority of cases paying hundreds before your death saves thousands after your death.
The information provided in all of our blogs reflects only a narrative of some elements to consider on the topic. The blogs do not contain considered legal advice and should not be relied upon as advice. Please see our website terms and conditions for full details of our disclaimer. If you are interested in obtaining advice, please contact one of our lawyers who will be happy and able to advise you on your own particular circumstances.