Fiducia Wealth Management
Posted in Inheritance Tax on 09.06.16

Few taxes are quite as emotive – or as politicised – as IHT otherwise known as ‘Death Duties’. The structures into which you transfer your assets can have lasting consequences for you and your family.

We can help you choose structures and trusts designed to protect your assets and give your family lasting benefits. It is crucial to find out now if you potentially have an IHT liability – or could do so in future years. Historically, IHT planning used to be an activity confined to the very rich. However, growing affluence means that this is no longer the case. Even families and individuals with a relatively moderate level of wealth should consider planning ahead to ensure that their assets are passed on to their loved ones as efficiently as possible.

Safeguarding your own financial future

Property price increases have also dragged many middle-class working families into the IHT bracket. Safeguarding your own financial future is very important, and giving too much away could put this at risk. At the moment, if your estate is worth more than £325,000 when you die, your assets may be subject to IHT. This means the value of your assets above the £325,000 threshold could be subject to IHT at 40%.

Passing on assets worth up to £650,000

Married couples and registered civil partners are allowed to combine their allowance, so they can pass on assets worth up to £650,000 before IHT is due. From 6 April 2017, the Government is adding a family home allowance to the tax-free allowance. It will start at £100,000 per person in 2017, rising to £175,000 by April 2020.

Combined tax-free allowance of £1m

This means that individuals will eventually be able to pass on an asset worth up to £500,000 without any IHT being due. For married couples and registered civil partners, this adds up to a combined tax-free allowance of £1m. However, if your estate is worth more than £2m, the family home allowance will gradually taper away. This change is designed to allow middle income families whose only large asset is their home to pass it down the generations without paying a significant IHT bill, which in some cases can only be met by selling the property.

Family home allowance draft legislation

The draft legislation currently states that the family home allowance is only applicable if the assets are passed on to children, including stepchildren, adopted and foster children, grandchildren, and other lineal descendants or the spouses of lineal descendants. So if you don’t have children or grandchildren, you may still face an IHT bill. If you want to move to a smaller property, you will be able to still keep an allowance based on the value of your previous property as long as assets of equivalent value are left to direct descendants.

For more information on the options available to you and your family download our free Guide to IHT Planning or contact one of our experienced team of IFAs.

Content of the articles featured in this publication is for your general information and use only and is not intended to address your particular requirements or constitute a full and authoritative statement of the law. They should not be relied upon in their entirety and shall not be deemed to be, or constitute advice. Although endeavours have been made to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No individual or company should act upon such information without receiving appropriate professional advice after a thorough examination of their particular situation. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of any articles.For more information please visit Article: Inheritance Tax and your Property

If you would like to know more about how we as Financial Advisers can help you with Inheritance Tax visit the Estate Planning section of our website: Estate Planning or send us email at: [email protected]

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Fiducia Wealth Management
Posted in Inheritance Tax on 09.06.16