The complexities of inheritance tax explained

Planning for what happens to your money and possessions after you are gone may sound daunting but it is a necessity.

By making the decision to ensure your assets are in order with the help of experienced, specialist financial advisers, you could save your loved ones’ hundreds of thousands of pounds in the event of your death.
This blog looks at the complexities of inheritance tax and why it is important to plan for it, as well as the likelihood of what will happen if you choose not to. Read on to find out more.

Inheritance tax (IHT) is a tax on money and possessions you leave behind when you die. It is payable on everything you own above a certain threshold and can include your home, jewellery, savings and investments, pieces of art, cars, as well as overseas properties or land.

If you plan to pass on these assets or money after you die, your heirs could face a big tax bill when they receive it. However, a certain amount can be passed on inheritance tax-free. This tax-free allowance is officially called the ‘nil-rate band’.

Everyone in the 2019/20 tax year has a tax-free IHT allowance of £325,000. The allowance has remained the same since 2010/11 and will stay frozen until at least 2020/21. If you pass on your home to your children – including adopted, foster stepchildren, or grandchildren – your allowance increases to £475,000.

You can also give away a certain amount of your money during your lifetime, tax-free and without it counting towards your estate. (Your estate is defined as your property, savings and other assets after debts and funeral expenses.)

To make sure your wealth is passed on to the people you choose, early planning is required. Inheritance tax is complex and there are severe penalties associated with breaking tax rules when incorrect or incomplete information is given to HMRC, which is why the best professional advice is crucial. That is where Chartered Wealth Management can help.

Our experienced, knowledgeable team can provide expert guidance on all aspects of tax issues, including inheritance tax. We provide advice on strategies to help to reduce the effect of inheritance tax on your estate, so that your wealth can be passed on to the people you care about.

Having an up-to-date will is an important aspect of limiting inheritance tax; by preparing a will, you can determine what happens to your money after you die. As a valued client of Chartered Wealth Management, you will not need to worry about the complexities associated with writing a will, as we work with a select number of specialist and reputable law firms who can be introduced to help you.

We are aware that circumstances in life change, often unexpectedly. For example, if you were to separate or get a divorce, this could have an impact on your plans. We will, therefore, continue to host ongoing meetings with you on a regular basis and take any change in your situation into account.

Nobody likes to contemplate their own death, however, by taking the time now to consider inheritance tax planning, you could be leaving your loved ones considerably more than a lifetime of memories.