Inheritance Tax aka 'Voluntary Tax'.
Did you know that Inheritance Tax (IHT) is often referred to as the 'Voluntary Tax'?
This is because, with proper professional advice, you could legally reduce your IHT tax liability by tens or even hundreds of thousands of pounds, or even eliminate it altogether. Despite the saying that "Tax doesn't have to be taxing," in many cases, it can indeed be complex.
IHT is typically payable on the value of an estate upon an individual's death. It may also apply to certain gifts made during one's lifetime and certain trusts.
The government, through Her Majesty’s Revenue and Customs (HMRC), imposes a 40% tax rate on the value of an estate exceeding the current tax-free threshold of £325,000.
The estate's value is determined by totaling all assets, including properties, investments, cash, and other belongings. This total is then adjusted by deducting outstanding debts to finalise the estate valuation.
What IHT would be due on your estate?
| Estate Value | IHT payable to HMRC |
| £500,000 | £70,000 |
| £750,000 | £170,000 |
| £1,000,000 | £270,000 |
| £1,500,000 | £475,000 |
| £3,000,000 | £1,070,000 |
| £5,000,000 | £1,870,000 |
Don't get blindsided by Inheritance Tax
It's common for individuals to underestimate the possibility of their estates being subject to Inheritance Tax (IHT). However, it's surprising how easily estates can surpass the nil rate threshold.
Take a moment to assess the potential value of your estate. Don't forget to consider any life insurance payouts, which are likely to be included. Additionally, if you're employed, death in service benefits may need to be accounted for.
Why not engage in a conversation with us to explore the options available for managing, reducing, or even eliminating your potential IHT liability?
Many individuals mistakenly believe that investment planning is only for the affluent. However, this notion is far from accurate, and ordinary people are indeed losing out on valuable opportunities.
Contact us today.
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