Inheritance tax has been a political hot potato for some years and some changes have been made to its structure.
But, depending on the value of your estate when you die, many more people than used to be are affected by inheritance tax
Inheritance tax explained
Inheritance tax is the tax levied on your estate when you die, over a certain threshold. The tax is taken by HMRC on behalf of the government, and it is taken before the remainder is distributed to your beneficiaries.
Inheritance tax planning
There are measures that you can take during your lifetime to reduce the amount of inheritance tax your estate will be liable for.
For example, you can take out life assurance policies, whose purpose is to cover the inheritance tax bill, so freeing up your estate to go to your beneficiaries.
You can link your estate to trusts, so funds are transferred out of your estate whilst you are still alive – you can get the interest and income produced, but the capital element is outside your estate, as it is owned by a trust.
Property investment is also an option if you have cash assets. You can invest in property which produces a return while you are still alive, and when you die this property passes to your beneficiaries.
The key for reducing inheritance tax is to plan ahead, so you mitigate the effect of inheritance tax and maximise the amount you can pass on to your loved ones.
If you would like to talk about inheritance tax planning and reducing your liability, the team here at Hartsfield can help. Please get in touch.
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