Planning a Will?
Most people when thinking about tax, think of the tax deducted from their salary. Tax however can have unforeseen impacts for you and your family in the long term and especially upon your death.
Financial Fact Find
When looking to put in place a new Will, we will get you to do a Financial Fact Find of what you have. Only once we know the full extent of your assets can we advise you properly.
Whether you are single, married, living with a partner, or living with an elderly parent can all affect what tax will be payable.
I want to give away my house to my children. Surely this will mean no tax will be payable on it when I die?
If your Estate is taxable on your death, and you still live in the house. Just changing the title deeds into your children’s names will NOT be effective against Inheritance Tax. This is known as a reservation of benefit.
When making a gift of property the rule is that you must give up the asset entirely, and no longer “enjoy it”.
What Assets are chargeable to Inheritance Tax on my death?
All assets which you own, or own a share in will be included in your Estate. All assets are added up and the debts and liabilities are then deducted, to discover the value of your Estate. If your Estate is over the nil rate band on your death, potentially tax will be due.
Who is Exempt from Inheritance Tax?
All gifts to spouses and charity are exempt. If your Estate is to go to anyone else, typically your children, tax will be payable if your Estate is over £325,000 if you are single, or £650,000 on the second death of a married couple.
If you are a couple and have not married, it is essential you understand the impact IHT could have on your partner. Planning ahead could mitigate against the potential tax liability.
How can I avoid Tax being paid on my death?
If you give away cash assets and then survive seven years after the date of the gift, no tax will be chargeable on the sum gifted. Some types of asset can be put into Trust, and if you live over seven years after the asset has been put into Trust, the asset will be exempt from tax. There are ways that cash assets can be given away without adverse tax implications.
We recommend that you ask us prior to making any substantial gifts.
I have just sold my late mother’s property for more than the amount stated in the Inheritance Tax Account. What do I do?
The figure in the Inheritance Tax Account was an estimate. HM Revenue & Customs must be advised of the sale figure immediately. If any tax on the property is still outstanding that must be paid as soon as the funds are received.
I have just sold an asset, and it has sold for less than the amount stated in the Inheritance Tax Account. What do I do?
Depending when the sale has occurred, you may be able to claim Loss Relief. If you can claim loss relief, your claim must be put in quickly as such claims are time limited.
There are different rules depending on the asset sold. Property is treated differently from shares, on some assets no relief is available. Please call for advice.
We are re-developing some land, which will definitely sell for more than the amount stated in the Inheritance Tax Account. What should we do?
If the nature of the property can be classed as having “changed” substantially, this may result in you coming under the CGT rules rather than the IHT rules. This can make a huge difference to the amount of tax that could be potentially charged. As the Revenue look at matters case by case, please contact us for advice.
I want to make regular gifts to my family. Is this legal, and will it have a tax implication?
There are various rules about making gifts to family members. Not only is it important to use your annual allowance (£3000 per year), but it is also possible to make regular gifts out of income and in some cases you will not be penalised if more substantial sums are given.
Please contact us to ask what you personally can do.