Inheritance Tax was once considered a tax only for the very wealthy, however with the starting threshold for paying the tax being frozen at £325,000 since 6 April 2009 and continuing increases in house values, more and more estates are now being caught within the Inheritance Tax net. Tax receipts have reportedly been increasing by approximately 8% each year since 2009/10 and the Office for Budget Responsibility has said that the proportion of estates attracting Inheritance Tax would double within the next four years.
With the current rate of Inheritance Tax being 40% on the value of your estate above £325,000 (the nil-rate band) it is important that you take steps to avoid leaving your beneficiaries with unnecessary tax liabilities. With proper professional advice and having a valid Will in place, there are a number of options available to help reduce your potential Inheritance Tax liability on death.
The Government have already announced proposals to significantly change the treatment of individual pension schemes from April 2015, which will have potential benefits from an Inheritance Tax point of view and the Prime Minister has recently stated that “Inheritance Tax is a tax that should be paid by the very wealthy and I think you should be able to pass a family home onto your children rather than leave it to the taxman”. As a result, we may see further announcements from the Government soon.
There are a number of tools that can be used now, to ensure more of your wealth passes to your beneficiaries after your days. If you wish to discuss these please contact us.