Before we get into the myths, let’s first explain what Inheritance Tax is.  When you die all your assets or a share of any assets you jointly own are added up and if the value is over the Inheritance Tax threshold then your estate has to pay Inheritance Tax to the Government.  You pay Inheritance Tax on the amount that is above the threshold.  

At the moment the threshold is £325,000 and Inheritance Tax is 40%.  So if your estate is worth £400,000 the IHT tax bill is 40% of £75,000, a whopping £15,000!

But if you do Estate Planning you can reduce or maybe not pay Inheritance Tax at all.

Myth 1 

One of the most common myths concerning Inheritance Tax is that is it only paid by really rich people.  Wrong. 

With property prices remaining high many more of us are finding that the total value of our hard earned assets is over the Inheritance Tax threshold and we will be liable to pay Inheritance Tax. 

Myth 2 

Another myth is that if you are a married couple or civil partners you don’t need to worry about Inheritance Tax as your partner will inherit everything free of Inheritance Tax.  Not necessarily. 

Without a Will and under the rules of intestacy, if there are children a portion of the estate will go to them and could trigger an Inheritance Tax charge. 

Inheritance Tax Busted 

If you want to make sure your loved ones and favourite charities inherit your wealth, and you don’t end up paying too much of it over to the Government in Inheritance Tax the good news is you can do something about it. In the financial services world we call this Estate Planning. 

These are some of the things your Financial Adviser can advise and help you with to lessen the amount of Inheritance Tax your estate will need to pay when you die: 

Make a Will – a valid and well-structured Will can help you reduce Inheritance Tax

Look into exemptions – such as moving assets between spouses or civil partners

Making gifts – you’ve got an annual amount of £3,000 that you can gift away

Consider trusts – putting things into trust can reduce or possibly eliminate your Inheritance Tax liability 

Estate planning is not regulated by the Financial Conduct Authority. 

Tax treatment depends on individual circumstances.  Tax treatment, rates and allowance are subject to change. 

Will writing is not regulated by the Financial Conduct Authority. 

The FCA do not regulate trusts.

At Four Oaks Financial Services, our initial consultation is at our cost. Contact our Client Liaison Team on 01543 401029.