£4.7 Bn of Inheritance Tax payments were collected by HMRC in tax year 2015 -16 , that’s a record amount of money from inheritance tax, mostly because of rising house prices.
That is a rise of 22% more than the previous year. And double the Inheritance Tax collected when the Nil Rate band was set at the present level of £325,000 in 2009.
An individual can pass on wealth up to the value of £325,000 without paying tax and a couple can pass on £650,000. Anything over this amount is taxed at 40 per cent.
Please remember that for amounts up to the NI rate band, you are not exempt from tax, but rather taxed at 0%.
Inheritance Tax is a tax initially intended to capture only the rich, but is now being paid by people who are not particularly wealthy but have been dragged into paying the tax due to rising house prices.
Is Inheritance Tax a tax on the wealthy?
The rich have avoided Inheritance Tax by using family trusts. It used to be incredibly expensive to set up family trusts but more recently the cost of establishing trusts has come within most people’s reach.
There are many ways to reduce the impact of Inheritance Tax – Trusts are only one of them. Inheritance tax is not a tax on the rich, it is a tax on the unwary.
Are we referring to Tax Avoidance Schemes?
The difference between tax avoidance and tax evasion is the thickness of a prison cell. We only use authorised routes for Inheritance Tax planning, why would you need to do differently, when with prior planning you can avoid most or all of this dreaded tax.
Residential Nil-Rate Band
The new Residential Nil-Rate Tax Band means anyone with a reasonable level of assets needs to take advice AND review existing arrangements. Click here to read more
Care in your old age
You will have read articles on the costs of care and how local authorities can seize you house to help pay for this. Maybe you would like the truth – For further information, please click here for details of The Care Act.
You can also download our Inheritance Tax Planning booklet by clicking here.
Wills
The majority of people give more thought and time to planning their annual holiday than on considering how best to manage their personal affairs, this is particularly true with regard to time and consideration on how their Wills should be drafted.
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Tax Planning
One is legally allowed to arrange one’s financial affairs so that one pays the minimum of tax. We have always advocated that clients look first at government approved avoidance schemes, such as ISA’s, Pensions, Enterprise Investment Schemes & Venture Capital Trust investments.
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Lasting Powers of Attorney
Thinking and talking about what would happen if our faculties deserted us is uncomfortable. That is why it is important to consider Lasting Powers of Attorney. Imagine how much worse the situation would be for your family if you had a stroke, serious accident or dementia without making appropriate arrangements.
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Residential Nil-Rate Band
The Residential Nil Rate Band Under the current Inheritance Tax regime, on death the first £325,000 of each individual’s net estate is taxed at 0%. This is known as the “nil-rate band” (“NRB”). Unless any tax reliefs apply, the rest of their net estate is then taxed at 40%.
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