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CH47 2BQ

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 Inheritance Tax Planning

Once considered a tax on the wealthy Inheritance Tax is now a Tax on almost everyone.

First let me explain what exactly inheritance tax actually is and at what rate is it charged and when.

An Inheritance tax calculation is a tax applied to everyone's estate on death. It is important to know that EVERYONE is liable to Inheritance Tax. The only reason that everyone does not actually pay it is because there is an amount that is allowed where there is 0% charged. This is important to be aware of as it is not tax free it is just currently zero rated. This means that the government could actually charge a level of tax on this threshold in the future if they see fit.

What is the zero rated amount?

At the moment the Zero inheritance tax rated amount is 285,000 this is also know as the inheritance tax threshold. So if your estate is worth anything up to 285,000 currently there is a 0% tax charge on it so there will be no tax to pay.

Above this amount however there is a 40% tax to pay.

We have an Inheritance tax calculator on another page which you can access by clicking on the link -
IHT calculator on the upper left of this page.

But for an example an estate worth say 400,000 which may consist of :-

House - 240,000

life insurance not in trust - 100,000

Contents known also as chattels valued at 40,000

Savings and investments which come to - 10,000

A car worth 10,000

Giving a total taxable estate of 400,000

Would be broken down this way the first 285,000 is taxed at 0%

This leaves 115,000, this is taxed at 40%, therefore meaning there is a potential tax bill due to the Inland Revenue of 46,000

It has to be said that this example above is far from far fetched there is a large proportion of the population that could actually die and easily leave an estate at least this if not considerably more, meaning that good inheritance tax planning is not just the requirement of the rich.

Why are we talking about Inheritance Tax advice on a life insurance site?

Simple one of the ways of mitigating inheritance tax at this time is to write life insurance policies in trust. By doing what is a simple and in most cases a free thing you can save a fortune in tax. For more information on writing a life insurance policy in trust click on the contact us tab on the upper left of this page and submit an enquiry and one of our specialist advisors will assist you further.

In addition to this if there is nothing that can be done to mitigate the inheritance tax on an estate you can always take out a life insurance policy write in into trust and use the proceeds to pay the tax bill. This is very common place once all other avenues of reducing the ultimate bill have been exhausted.

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