Over the years the government has added a series of exemptions to allow families to pass more of their wealth down to future generations but in practice, the system has become confusing. This has led to the need to take professional independent financial advice.
To start with it should be noted that any inheritance left to a spouse or civil partner is tax-free.
Presently the amount that any person can leave to others without the need to pay tax is £325,000. This is known as the “nil rate band”. A person who dies and does not use all of their nil rate allowance can pass the remainder onto their spouse. If this allowance had kept pace with inflation the nil rate band today would now be worth £414,000.
For anyone who has used their full nil rate band allowance and owns their main residence they can make use of a recently introduced additional allowance known as the “residential nil rate band”. This allowance enables an additional £125,000 to be used if the value passes on to a direct descendant such as your child, grandchild or their partners.
You can give away as much of your wealth as you wish without any tax implications as long as you live for seven years after making the gift. Presently you can gift £3,000 a year without it incurring inheritance tax and you can carry the allowance forward for one year if you do not make use of it. This allowance of £3,000 was initially set in 1981 by the then Chancellor of the Exchequer, Geoffrey Howe. If this allowance had kept pace with inflation it would now stand at nearly £11,000.
The small gift allowance also allows you to gift, to as many people as you like, up to, £250.00 per tax year without any tax implications.
If you would like to ensure that as much of your estate passes on to your family rather than the tax man, why not arrange a meeting. The first meeting is free and without obligation. At this meeting, we will get a better understanding of your circumstances and what you are trying to achieve. We have offices located in–
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So why not arrange your financial planning meeting today?