Benjamin Franklin wrote “nothing is certain except death and taxes“, and something that pulls them both together is Inheritance tax.
There are two ways of avoiding paying Inheritance tax: first, you could die without having any money, and second, you could never die. But if you are not an impoverished vampire, read on …
What is Inheritance tax?
Inheritance tax (IHT) is a tax on the estate of someone who has died. This includes cash, property and all other assets, also known as the estate. Inheritance tax is one of the ways the UK exchequer can collect money to pay for services; read more about it on gov.uk Inheritance Tax Statistics.
That sounds simple – why do I need a solicitor?
You have a tax-free allowance known as a Nil Rate Band (NRB). This means that if you die, the first £325,000 of your estate can be left tax-free.
The remainder of your estate will pay IHT of 40%.
Your tax-free allowance increases to £500,000 if you give your property to children or grandchildren. This includes adopted, fostered or stepchildren.
What about gifts? Are they taxed?
Gifts left to your spouse, to your civil partner, or to charities in your Will are free of inheritance tax. However, making lifetime gifts within seven years of your death will reduce your tax-free allowance.
For example, if you gave away £100,000 the year before you die, your NRB for the remainder of your estate is reduced to £225,000.
Writing your Will with a specialist advisor, such as a Lifetime Lawyer, is important. They’ll ensure that your beneficiaries don’t pay any more tax than necessary.
Dying without a Will
If you decide this is all too much trouble and you should let the state decide how your assets are distributed when you are gone, have a look at our Intestacy Flowchart to see what happens.
When you decide to write your Will – or update one you already have – we recommend you use a Lifetime Lawyer (such as Cunningtons) to help you.
5 Reasons you should use a Lifetime Lawyer:
- Our lawyers are specialists in helping you plan ahead for the future;
- They’ve built experience working with clients just like you;
- They’ve undertaken additional training to support you when making key decisions;
- They’re committed to providing affordable, high quality legal advice, and will ensure any decisions are your own;
- They’ll always try to use language you understand and go above and beyond to support you.
Contact us for an appointment
If you would like to speak to a Lifetime Lawyer, contact us and we will arrange a consultation.
We have branches in Braintree, Brighton, Chelmsford, Croydon, Hornchurch, Solihull and Wickford.