When it comes to planning for inheritance tax, itís never an easy subject to contemplate, but if you donít take adequate steps to plan for the future in the event of your death, you could face the possibility of leaving a bill for 40% of everything you own behind for your loved ones. The impact of IHT can be minimised by taking the appropriate precautions to ensure that such circumstances donít arise.
What is IHT?
Inheritance Tax was traditionally seen as a tax for well off individuals, however due to rises in property prices, and a threshold of only £325,000 for single people (£650,000 for people in civil partners and married couples), people are increasingly finding themselves being caught out by the inheritance threshold, with many people not even being aware about the circumstances surrounding inheritance tax until a family member or a friend passes away.
How does IHT Currently Work?
In Julyís 2015 budget, the chancellor announced that a new Ďmain residence nil rate bandí would be phased in from April 2017. The idea of this new band is to ensure that fewer families are affected by IHT. However, there are certain circumstances where you may be liable.
- By 2020, the threshold could be as much as £1million if youíre in a civil partnership, youíre a widower, or youíre married. If youíre divorced or single, the threshold will only £500,000.
- Over time, the main residence nil rate band will be £175,000 per person. This wonít be fully phased in until April 2020.
- The new rate is only applicable to people who leave their family homes to direct descendants (children or grandchildren).
Many people donít even bother researching the current circumstances surrounding IHT. They might be vaguely aware of it, and end up leaving assets and money to their families before they pass away, which can often cause disputes and problems between family members. Donít leave it until itís too late, get in touch with the IHT experts today to find out how we can help you.
Get in Touch
Here at Prudent FPA, weíre committed to helping our clients determine if they have any potential inheritance tax liabilities, and in some circumstances can completely get rid of your potential burden. If youíre in the Lancaster and Morecambe area and need more information regarding our services, or if you have any questions regarding IHT, and how to tackle any potential issues which may arise, call us today on 01524 849955. You can also fill out the form on the ĎContact Usí page and weíll be in touch as soon as we can.