It is always traumatic when someone close passes away, and the last thing on anyone’s mind is tax and money while grieving. Matters are only made worse by the complicated and long drawn out process of applying for probate, and calculating any tax due on an estate.
We can help you with the burden of inheritance tax administration, as well as dealing with your probate for you.
You may also be thinking about how to best pass your legacy to your family and children, so all of the years you have spent working and saving can benefit those close to you.
Our experts can help:
- Advise whether there are any reliefs available to pass your assets to your children and other beneficiaries;
- Reduce the surprise of an unexpected tax bill at a time of trauma with advance planning, to give you the opportunity to make provision for tax;
- Help you write a will, and keep it up to date alongside your yearly tax compliance;
- Act as an agent for probate, to help ease the trauma of losing someone close.
We can help you make a difficult time, hopefully a little less traumatic. Please contact us for advice and support
How much money can you inherit before you have to pay taxes on it?
Inheritance tax is payable on the value of an estate that is above £325,000 (or the nil-rate band). This is payable at 40%, but 10% or more of the net value of the estate is paid to charity this can be reduced to 36%.
What is the 7 year rule in inheritance tax?
If you receive a gift within the 3 years before a person’s death, and the estate is above the nil rate band, then you may have to pay inheritance tax on the gift of 40%. Any gifts received between 3 and 7 years before the death will be subjected to a reduced rate, or ‘tapered’ depending on the number of years the death occurred after the death.
If the gifter survived for longer than 7 years after the gift then it is not included in an inheritance tax situation, and no tax is due.
Can I give money without the risk of inheritance tax?
Yes, you have an annual allowance of £3,000 per year, and this can be carried forward to the next year as well so if you made no gifts in one year, you can may £6,000 of gifts in the next year. You may also give £250 to anyone, as long as they have not benefited from your £3,000 relief.
Furthermore, you may give wedding gifts of £5,000 to a child, £2,500 to a grandchild and £1,000 to a friend or other relative.
Are there any reliefs available for inheritance tax?
Yes, there are also reliefs available on agricultural property such as working farms, and on business property and shares, depending on the size of the holding.
How can I avoid inheritance tax?
Accepting that you may have to pay some inheritance tax is difficult, however with open conversations and some planning it may be possible to plan your estate to be more efficient for inheritance tax. It may also be a good idea to consider starting to make lifetime gifts to reduce the amount of capital that could be included in your estate.