Inheritance Tax – What is Changing?
Inheritance Tax is a tax that most of us rarely plan for, but is one that many of us are affected by. As an independent financial adviser in Lincoln and across the East Midlands we work with our clients to advise and support them on all aspects of Inheritance Tax and wealth management planning.
Traditionally, it had been considered as a tax that only affected the richest people in society, however more and more people with modest estates are incurring such a liability. When it comes to your inheritance, you’ll want to make sure that you are legally covered with everything to do with it. If you are concerned about the state of your inheritance, you might want to check out a site like inheritancerecovery.com as they may be able to help you through any legal process that you may have to endure. This is because, over the last 20 years, assets have risen in value, most notably house prices which have grown considerably over the past two decades. For more Will and Inheritance information, why not visit https://www.corporate-cases.com/2018/10/your-rights-as-a-beneficiary-to-wills-and-inheritance.html.
Yet there have been only small changes made to thresholds over that time, especially since 2009 meaning that more and more people are being affected by Inheritance Tax. Under the current rules each person has an individual Inheritance Tax threshold of £325,000, however if you are:
- Married or in a civil partnership, your allowances are added together, meaning you have an overall threshold of £650,000.
- Widowed, your threshold could be up to £650,000, depending on how much allowance was used when your partner passed away.
- Divorced, you will both once again have a threshold of £325,000 each.
The Inheritance Tax Cut-Off Line
When you die, if your estate’s chargeable value is higher than your Inheritance Tax threshold, 40% of the value of everything you own above it will be taxed. This could result in your family losing out on a large portion of their inheritance and they could even be left with the task of paying an Inheritance Tax bill at a difficult time. As an experienced independent financial adviser in Lincoln, Castlegate can help you plan, reduce or even eliminate your potential Inheritance Tax liability. Having a Will for your estate could make things a little easier for your family if you pass away, you might want to visit Prime Law Firm or a law firm more local to you, if you want to find out more about Wills and Estates.
From April 2017, a new ‘main residence’ nil rate band will be introduced in stages that, if applicable to you, could mean your individual threshold is £500,000 or jointly £1 million should death occur after April 2020. It could mean that many will either see their Inheritance Tax liability significantly reduced, or face no charge at all. However, the additional allowance will not be available to everyone as it is clawed back for estates valued at £2 million or more and has conditions attached.
Important Qualifications & Exceptions
Whilst the new allowance will be a boost for thousands of families, not everyone will be able to take advantage of the new allowance. For example, for it to apply, you must leave your main property to a direct beneficiary, such as a child or grandchild. For those planning on leaving your home to a nephew or niece the new allowance will not be available. Also, any properties other than your main property will be counted within your £325,000 per person threshold.
There are several things that you can do to address your Inheritance Tax liability, as an experienced independent financial adviser in Lincoln we can work with you to reduce your liability. If you are looking for a financial adviser in Lincoln or across the East Midlands, please do not hesitate to get in touch to talk about the most appropriate financial planning solutions for your personal circumstances.
Please visit the government’s website for more information about changes to pensions in the UK.