Inheritance Tax
Death is a difficult subject to talk about and often tax planning is ignored.
Death is a difficult subject to talk about and often tax planning is ignored resulting in high tax bill for the inheritors in the event of a death. IHT planning is the process of understanding potential tax liabilities and taking steps to keep those liabilities to a minimum. It is also a daunting subject. As a result, IHT planning is often put off until it is too late, resulting in overpaid taxes, when in a lot of cases a few small steps could save thousands.
Planning for IHT begins with a review of what you own, including property, possessions, shares, savings, pensions and other assets. If you are the owner of all or part of certain businesses, or of property or equipment used by a business, these will also need to be included in a planning review. The key issue is to arrive at a value for your estate that is as accurate as possible.
The next stage is to understand potential IHT bills for your estate and your beneficiaries. The threshold for paying IHT is known as the nil-rate band or NRB (£325,000 in 2022/23) which is currently well below the average value of a home in the south-east, and far below the value of many estates.
However, a range of exemptions and allowances are available which significantly reduce IHT liabilities. A key exemption comes under the residence nil-rate band (RNRB) which allows a further band of residential property value to be tax-free (£175,000 in 2022/23) if the property is left to children or grandchildren. Combined with the nil-rate band, this gives a significant increase to the tax-free exemption.
Professional advice is key to fully understanding the detail of all the complexities of what is, and what is not, exempt from IHT. Please get in touch should you need further help.
Please feel free to get in touch for an initial free consultation info@garrisonaccountants.co.uk
