During the tax year ended on the 5th April 2016 HM Revenue and Customs (HMRC) has taken a record £4.6 billion in inheritance tax.
A staggering figure with many people still being unaware of the tax consequences to their estates when they die
When you die, it is the responsibility of your executors or personal representatives to submit an account to HMRC detailing all of your assets. If this list (after the deduction of any debts) adds up to more than £325,000 for an individual (£650,000 for a couple) then it significantly likely that you will be making a contribution to HMRC’s next record year!
The best way to demonstrate this is by way of a simple example:
If you jointly leave an estate of £800,000
Your representatives on death claim up to £650,000 without any tax being paid.
Anything over £650,000 which in this example is £150,000 is then chargeable to tax at 40%.
So the tax payable by your representatives would be £60,000.
With house prices in our area on the increase, life insurance arrangements taken into consideration on death and more flexibility over pension funds – yes these also count! It is easy to see how the values build.
Inheritance tax is simply no longer just a tax for the wealthy. The most important thing to do is examine whether you’ll pay inheritance tax and what to do about it. As always we believe that advice is essential.
If you would like advice or further guidance on Inheritance Tax Planning or any other financial matter then please contact our office today to arrange a FREE initial consultation.