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Apr. 28, 2015

Facts you need to know about inheritance tax

If you died wouldn’t you want your loved ones to be sufficiently taken care off and receive the money you had worked hard for throughout your life? That’s a natural presumption, you build an estate over your lifetime, pay your house off, put savings away, invest in properties and generally prepare for the future. Sadly if you don’t understand the intricacies of inheritance tax your loved ones could lose 40% of the money you leave them in taxes. Avoid that by reading these facts about the inheritance tax laws, be prepared for the unthinkable!

Understand the nil-rate threshold

By law you are allowed to leave a certain amount of money without your beneficiaries having to pay tax on it. The current threshold for this amount is £325, 000, if your estate falls below that amount your loves ones will be fine. Anything above that amount is subject to 40% tax which can be reduced with a Deed of Variation, this subject was covered in greater detail by our ‘How to save tax using a Deed of Variation’ article.

The limit is frozen

The present the nil-rate threshold has been fixed until 2017 at the earliest, there are rumours it might be subjected to change during the 2018 tax year. There is no guarantee this will happen though, so for the time being at least, the figure will remain the same.

Your spouse is entitled to a tax-free sum

If you pass away and leave everything to your husband, wife or civil partner they are exempt from the current inheritance tax laws. This applies even if your estate totals more than the £325,000 threshold, so you can rest safely in the knowledge they’ll get the full amount.

There are ways to avoid paying Inheritance Tax

Gifts made to charities and political parties are tax-exempt, so are annual gifts of £250 to the loved ones in your life. It’s a tricky area though so it’s best to get advice about inheritance tax if you have any doubts, we’re ready to answer any queries you might have at the Steele Rose Group.