Have you seen the News that Inheritance Tax (IHT) have soared by 60% over the past five years, Figures have risen from £2.9bn in 2011/12 to £4.7bn in 2016, This could be a sign that not enough people are planning for their inevitable demise.
Unfortunately for the majority of us, this is not a new phenomenon, as receipts have been increasing year-on-year since April 2009 when the IHT allowance was frozen. Then from 2014/15 to 2015/16 the rise was more than 20%.
However we at Keily Legal & Wealth do not believe it has to be this way with careful planning. Currently, IHT is paid at 40% if a person’s estate is over the £325,000 threshold when they die but there are ways of reducing the taxable value of YOUR estate while the individual is still alive
For example, YOU can give gifts. These are typically made directly to the recipient but could also be to Trusts, ISAs and pensions, as part of longer-term financial planning.
Every year, an individual can make a gift up to the annual exemption of £3,000. On top of this, any unused exemption from the previous tax year can also be used, so up to £12,000 per couple can be gifted in this way.
Workers can also make regular gifts out of their income completely IHT-free. However, these gifts must be from their post-tax income, be consistant and leave them with sufficient income to maintain their current standard of living.
Most people know that parents and grandparents can make one-off gifts on marriage, Birth of children or grandchildren of up to £5,000 and £2,500 respectively. However, fewer people know that it is possible to gift up to £1,000 within this exemption.
Meanwhile, in each tax year a person can gift up to £250 to any number of people completely free of IHT, as long as they have not received a gift that uses another exemption. In addition, donations to charities or political parties, either during the person’s lifetime or via their Will, are exempt from IHT.
We suggest that if you are in Essex, Billericay, Brentwood, Sheffield, Ingatestone, Chelmsford, Harlow, Colchester, Basildon, Southend, Benfleet, Romford then you get in touch at contact@keily.legal and book an appointment to see what can be done for you and your family. Otherwise check out keily.legal and see if we can help you and your family