Inheritance Tax:
Inheritance Tax is chargeable on death where the estate – including any assets held in trust and gifts made within seven years of death – is valued in excess of the Inheritance Tax threshold, which is called the "nil rate band"(the threshold is £325,000 for the years 2009/10 to 2014/15 inclusive). Inheritance Tax is payable at 40% on the amount exceeding this threshold.
An outright gift to someone during the donor's lifetime is potentially an exempt transfer and will only become chargeable to inheritance tax if they die within seven years of making the gift. The tax rate can be reduced for every year of survival exceeding 3 years.
However, gifts made to a Company or certain Trusts may be immediately chargeable and tax may have to be paid (at the rate of 20%) in the donor's lifetime if the total value of those gifts exceeds the inheritance tax threshold.
On death, all transfers made in the seven years before death are added to the value of the estate at death to work out whether any Inheritance Tax is payable. It is possible to add the unused lifetime exemption relating to a former spouse or civil partner, thus increasing the nil rate band.
Transfers and gifts between a husband and wife are exempt.
Reduce the impact with Pilbro
With effective Will drafting and lifetime utilisation of the nil rate band, reliefs and exemptions, the right planning can reduce the impact of this tax. Good IHT planning can also ensure that a business is passed down to the next generation with less stress and complications.
We are here to help: - Inheritance Tax planning is a complex subject, especially in regard to business property and trusts, and it is advisable to seek the assistance of a Tax Advisor.
Please call Pilbro on 01280 820 654 to speak to one of our experienced Tax Advisors. |
