Inheritance Tax planning
What is IHT?
Inheritance Tax is payable at death on the value of your assets that exceed the nil rate band, currently £300,000. The current rate of tax above this (£301,000.00) is 40%, (the only IHT tax bands arer 0% or 40%).
“Estate” and “Assets”?
Broadly speaking your estate is everything you own at the time of your death, i.e. your worldwide assets, less what you owe. Assets include all property, possessions, money and investments, collections, antique.
Are there any exceptions?
When an estate passes from husband to wife or wife to husband (civil partners), and both are domiciled in the UK there is no Inheritance Tax to pay, even if their Estates are above the Inheritance tax nil rate band threshold, following the first of the couple to die – this is known as ‘inter-spouse exemption’.
Simply relying on this exemption could have huge IHT implications on the estate of the surviving spouse on their death. most gifts or transfers made more than seven years before your death are exempt. Certain other gifts, such as wedding gifts and gifts in anticipation of a civil partnership up to £5,000 (depending on the relationship between the giver and the recipient), gifts to charity, and £3,000 given away each year are also exempt.
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The FSA does not regulate will writing or some forms of tax planning.
James Fernley & Partners (Life & Pensions) is authorised and regulated by the Financial Services Authority (www.fsa.gov.uk/register). FSA Registration No: 121092