UK INHERITANCE TAX PLANNING

Professional Advice

There’s one particular piece of advice that you will hear over and over again if you are planning on writing your will. “Get some uk inheritance tax planning advice!”. It’s the prudent thing to do before writing up your will. In getting some professional inheritance tax advice you are ensuring that when you die, your property and assets go to the people you want them to – and not the taxman! For example, there is no IHT paid on the first £275 000 you leave behind, but all assets above this level are taxed at a large 40%, unless they pass to your surviving spouse. There are also ways to avoid having to pay tax on the money gifts you may wish to pass to others – but you have to plan correctly for this to work.

Valuing your Assets

The very first step is to work out precisely what value you currently have and what you are worth in the eyes of the financial world. This helps you lay out exactly what procedures can be put in place to avoid inheritance tax before it is too late. Everything you own must be considered which includes company benefits you may have and other service benefits. It’s important during this time to spend some serious thinking time to decide where you want your money to go and whether such decisions are ‘tax efficient’ ones. Sometimes, making gifts while you are still alive is a good option.

Taxes on Gifts

Fortunately, the United Kingdom does not currently have ‘gift tax’, or tax on money gifts that you might make to others. However, some gifts are potentially liable for inheritance tax depending on when they are made. If you make a money gift to your children, for example, and then die six years later – the money is taxable under inheritance tax laws. The required number of years between a gift and your death, in order that inheritance tax be avoided, is seven! There are other ways however to reduce the liability of certain assets. There is an annual gift allowance and tax free marriage gifts to consider. A solicitor is a wise investment at this time, as there are many ways to help reduce the amount you will have to give to the taxman, but only those specifically trained in areas of law know about them all!

What is a Deed of Variation?

One good way to reduce the amount of tax you pay for dying is to create a deed of variation, sometimes called a deed of family arrangement. This can be used, especially if all of your assets have been left to your surviving spouse, to reduce the inheritance tax amount after that spouse dies. The spouse has a period of two years to re-allocate assets in a more tax efficient way.

Free legal advice

It’s important that you seek the professional advice of a confidential will solicitor if you are deciding how to write up your will and wish to make sure that the majority of your assets end up in the hands of those you love and care for. We offer a free legal advice service – simply fill in the form on this webpage and one of our friendly experts will be in touch to offer you free legal advice. We also have a helpline number which is listed below. There is no charge for our service and no obligation to use our services once you have received free advice.