This recording explains the 15 best ways to avoid inheritance tax, for more information, visit: [ Ссылка ]
To read the text from this recording, see below:
15 BEST WAYS TO AVOID INHERITANCE TAX
Inheritance tax, sometimes referred to as IHT, is a tax placed upon money and property that is gifted or inherited. Understandably many people approaching older age want to protect their estate and loved ones from the impact of IHT. This is often known as Estate Planning.
In this recording, we will:
Explain what inheritance tax is, and how it works
What your IHT allowances are
How to avoid inheritance tax on property and getting a tax bill
Help you to understand how inheritance tax can be minimised or avoided
Answer the question ‘How much is inheritance tax?’
Talk about the importance of estate planning and inheritance tax implications
and Discuss the use of trust funds and how this can help you to minimise the amount of tax your loved ones will have to pay
If you’d like to avoid inheritance tax or minimise your potential inheritance tax bill you’ll have to pay from your estate, there are a number of options available. These are simple and easy ways to organise your assets and potentially remove inheritance tax altogether.
It’s important to mention that these will only work if your financial situation is fairly straightforward. For more complex matters, proper planning and advice from a professional financial advisor is recommended
1 Make a gift to your partner or spouse
When you are married, or in a civil partnership, you can give anything you own to your civil partner or spouse. This means that your estate will not have to pay inheritance tax on what the gift is worth.
There are rules to bear in mind with this option – which can become complex if your spouse/civil partner was born outside of the UK or permanently lives outside of the UK. If this is the case, you should seek professional advice.
2 – Give money to family members and friends
You can give money or assets as gifts to family members and friends who are not classed as your partner or spouse. It is only classed as a gift if you are giving it outright (so that you no longer have any benefit from it). if you do this then you will not need to pay inheritance tax.
The value will still be included in your estate value for inheritance tax purposes – but only for seven years.
After this time, it is excluded from the total value and therefore, cannot be taxed. Bear in mind that you can only give away limited amounts per year – up to £3,000 annually. Therefore, you should try and give your money away, up to £3,000, seven years before you pass.
Capital Gains Tax may be payable on certain assets – so it’s worth discussing gifts with your solicitor or financial advisor to be completely sure.
3 – Leave money to charity
if you leave all of your estate to charity, there will be no iht to pay. However, many people only wish to leave a portion of their estate to charitable causes and the rest to family members and friends.
There are still advantages to charitable donations upon death – if you leave 10% or more of your estate to a charity, the amount due on the rest will decrease considerably. This is because instead of being calculated at a tax rate 40% the rate reduces to a tax rate of 36%.
4 – Take out life insurance
Taking out life insurance and directing the money into a trust will not directly reduce the amount of inheritance tax you’ll have to pay – but it will make it easier for your surviving family members to pay the inheritance tax bill. The proceeds from a life insurance policy, if paid via a trust, are not taxable.
The payout from the life insurance may prevent them from having to sell the family home, for example.
5 – Avoid inheritance tax on property
One issue that many people look at is how to avoid inheritance tax on their home. Whilst this is a complex subject, a trust can be one way to achieve this and ensure that your estate do not have to pay inheritance tax.
This is a legal arrangement that enables you to give cash, property or investments to somebody else to look after for the benefit of a third party.
You can, for example, put savings in trust for your children – or a spouse or civil partner.
There are two important roles required within a trust fund.
The first is a trustee (the person that owns and manages the assets in the trust). The second is a beneficiary (the person that the trust is set up for. Often they are unable to manage it themselves due to age, disability, etc.).
When you put items in a trust they no longer belong to you – and this is where the inheritance tax benefit arises.
