Inheritance Tax – A Voluntary Levy Referred to commonly as IHT, this form of taxation covers the
estate of someone who has passed away, including all properties, possessions
and money. And despite only a handful estates being large enough for this to be
applicable, it is still something of importance that can be easily overlooked. This month’s blog at Clifton-Crick Sharp & Co
offers
a guide to inheritance tax. For further details, call us in Worcester on 01386 561100 .
When it Must
be Paid Applicable IHT must be paid by the end of the sixth month
immediately following the deceased’s passing, failure to pay within this period
will lead to the charging of interest. Therefore, it is advisable to pay at
least some of the IHT within that six-month period even prior to grant of
probate. This is known as “payment on account” – HMRC will
refund any overpayment that occurs.
Tax Reduction Although difficult, it is possible to reduce your IHT rates and
the following points will provide some insight on how to achieve this:
Leave a legacy to
charity Making potentially
exempt transfers Investing in
business assets Leaving assets to
your heirs by putting them into a trust Leave your estate
to your spouse Pay into a pension
rather than a savings account
How Much is
IHT? The amount of money taxable depends solely on the total value of
the deceased’s estate, which includes money in the bank and total value of all
property from building to vehicles. There is no tax to pay if your estate is
either valued below £325,000 or anything over the £325,000 mark is left to your
spouse or a charity. Married couples and civil partners can transfer any unused
element of their IHT nil-rate band to their living partner when they die. This
means a couple has a joint nil-rate band of £650,000.
In April
2017, an additional inheritance tax allowance was introduced called the
‘residence nil-rate band’. To qualify for this allowance, you must pass on your
main residence, or the sale proceeds of your former residence, to your children
(including adopted, foster or stepchildren) or grandchildren when you die.
The Threat of IHT The recent and high increase in property value sees more and more people
falling into the category of IHT payee, and it takes foresight to fully realise
how this may affect you in the future, and how you can minimise the amount
taxed.
Contact Us For further information about inheritance tax, don’t hesitate to contact Clifton-Crick Sharp & Co. Call us on 01386561100 . Alternatively, you can make an enquiry through
our contact form .