Inheritance Tax Rules
Can you legitimately and legally avoid Inheritance Tax?
UK residents will contribute unnecessarily to Government coffers nearly £2bn this year as a result of poor inheritance tax (IHT) planning, according to the annual Tax Action report by unbiased.co.uk.
Lack of IHT planning provision represents the second biggest tax wastage area in the UK according to the research and this is likely to worsen, as IHT Nil Rate Band remains frozen at £325,000, rather than rising in line with inflation.
Vast sums are paid to HR Revenue & Customs and are thus lost from estates every year because individuals had not made adequate provision to avoid or mitigate IHT. Such situations can only bring additional unwelcome stress for the deceased’s family at an already difficult time, as this tax must be paid before the estate assets are released to beneficiaries.
An integral part of IHT planning is having an up to date Will the provisions of which can be tax efficient and ensure that beneficiaries each receive an inheritance that is not reduced unnecessarily by a liability to IHT.
At Pearson Rowe, our Wills & Probate Team can assess if your estate is likely to exceed the current NRB limit and advise on steps that can be considered, to eliminate or reduce the potential liability. This could include careful IHT planning written within your Will, Life Time Gifts, Transfer of a deceased spouse’s unused NRB allowance or maybe the establishment of Family Trusts. With the average UK house price at £237,767.00 (House Price Index of Rightmove.com) estates often exceed the NRB when savings, investments and the proceeds of insurance policies are added. If you consider that your estate may have the potential to exceed £325,000 contact us now for advice.
Whilst we would always advocate careful IHT planning in advance, it is sometimes possible in certain circumstances for an IHT burden to be reduced by a Deed of Variation to a deceased’s Will, after the death has occurred. This is usually when deaths occur within two years of each other.
We were recently able to draw the attention of the executors of an estate to such opportunity and we were instructed us to proceed with the preparation of a Deed of Variation. As a result, Pearson Rowe successfully recovered in excess of £300,000.00 in IHT paid to HM Revenue and Customs which went to benefit the residuary beneficiaries of the estate concerned, many of whom were charitable organisations and who have commented:-
“I note that the amount received is substantially more that the original bequest would have been and would like to express our sincere thanks and appreciation to those responsible for this increase” MAF – Flying for Life
“We were delighted to read that the executors have saved over £300,000.00 by entering into a Deed of Variation” UNICEF
“ I know that our office has sent you an acknowledgement of the cheque you sent but I did also want to send a personal response…. I am extremely moved and grateful for this generous donation. Every penny will go to help with our work” Trustee - Mission India
Contact Us About Inheritance Tax Rules?
There is only one way to ensure that everyone you care for is taken care of at the same time as limiting the amount of Inheritance Tax that you have to pay, and that is to have a professionally drafted Will and some advice about the Inheritance Tax rules.
For immediate assistance please call us on 0121 236 7388 or make a quick Online Enquiry and we will soon be in touch with you.
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