Inheritance tax – a 40% tax on all you have saved in your lifetime.
Inheritance tax is uniquely a tax payable on death. Broadly, if your assets are above £325,000 then whatever is above this is taxable at 40%. This value of £325,000 is known as the nil rate band.
Or to put it another way, the wealth you’ve built up over the years may NOT pass completely to your partner or your children, but will be taxed at 40% first.
Inheritance tax is notoriously complex and the amount you pay - or don't pay - is dependent on many factors: who you are leaving your assets to, what type of assets and whether there are any tax reliefs available to you.
Here is a link to the HMRC Inheritance Tax overview page
Bearing these points in mind, there are legitimate, well known and accepted ways of mitigating inheritance tax.
To be clear, Phoenix Wills and Probate do NOT provide high risk schemes to reduce your inheritance tax bill. We provide advice on strategies which are well accepted by HMRC.
However, inheritance tax is highly complex. There are various reliefs which can reduce your inheritance tax bill, such as spousal exemption, the transferable nil rate band, various reliefs on lifetime gifting as well as the newly introduced but highly controversial residence nil rate band.
What is important is that to take advantage of these various reliefs, the right strategies must be put in place. Having the right Will in place is critical – often a simple Will cannot take advantage of the reliefs available.
Trust Phoenix Wills and Probate to give you the right advice on inheritance tax and how to reduce your tax bill.