Reduce Inheritance Tax
Three good reasons to reduce Inheritance Tax:
• 70% of people die without making a Will
• 82% of life policies are not in trust
• £3.6bn paid in Inheritance Tax in 2006/07
Inheritance Tax is payable at 40% of the value of an estate over the nil rate band(s). For a couple with an estate valued at £800,000 this could result in an Inheritance Tax bill of £60,000. For a couple with an estate valued at £2,000,000 this could result in an Inheritance Tax bill of £540,000. Getting good advice & effective financial planning could help significantly reduce Inheritance Tax payable.
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For the Tax Year 2009/10 the following exemptions for Inheritance Tax apply to every individual:
Definition
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Amount of Exemption
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- Gifts to Spouse / Civil Partner
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- Gifts to other Individuals
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- Regular Gifts out of Income
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- Gifts in Consideration of Marriage / Civil Partnership
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- £5000 made by Parent
- £2500 made by Grandparent
- £1000 made by anyone else
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- £250 to any number of different recipients
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Pre-Budget Report 9 October 2007
As a result of the change made in this announcement a married couple, or civil partnership, can carry forward any unused Inheritance Tax nil-rate band on the first death for use on the death of the surviving spouse / civil partner.
The Conservative Party's proposals for Inheritance Tax
The proposals are for a £1m Nil Rate Band with the ability to transfer this to a spouse or civil partner, creating the possibility for couples to transfer up to £2m free of Inheritance Tax on death. Although this is likely to reduce Inheritance Tax for a number of estates there are three key Inheritance Tax Planning reasons why everyone should still take advice when deciding how their estate is to be handled after their death:
- Control – Who gets the money / assets
- Flexibility – Making use of the new flexibility introduced by the higher Nil Rate Band and, safeguarding against future changes introduced by another government in the years ahead
- Protection – Making sure you don't end up paying c100% tax
For more information on how to reduce Inheritance Tax look at the page titled
"Inheritance Tax Planning" - please
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