Inheritance Tax (IHT) is a tax levied on the estate of someone who dies and, subject to certain exemptions, MUST be paid before probate is granted.
- It is a tax that now affects many estates, not just those of the wealthy
- Inflation, increasing property values, benefits of share ownership and savings mean that many more families than before now pay Inheritance Tax
- Many families leave their estate planning far too late and their family wealth is dramatically reduced by tax before reaching their loved ones
- You can legally avoid and reduce the effect of Inheritance Tax on the accumulated family wealth
Taxation rules are complex, but in general terms a family could consider:
- Do nothing, accepting that your beneficiaries effectively pay the tax
- Gift away assets during lifetime, using tax exemption benefits
- Have tax efficient Wills prepared by Legal Systems
- Gift to Family Trusts for the benefit of later generations (Legal Systems can arrange such facilities)
- Purchase Life assurance or utilise other financial investments to fund the tax
Note: There is no taxation on the first death of a married couple, but the IHT problem remains within the joint wealth.
Growth Chart: Property Value against IHT Threshold
NB: after 5 years the property value exceeds the IHT Threshold
This chart is based on:
- the average property price in Essex 2003 (£190,000)
- the average annual growth in property value since 1995 (11%)
- IHT threshold growing in line with average inflation rate (2.5%)
The chart above demonstrates that most property owners in Essex will have estate values that will attract an Inheritance Tax Liability. Please now use the table below to calculate your IHT liability.
IHT Calculator
Will and testament documents written with the inclusion of tax efficient Discretionary Trusts are an important part of our specialist service. Substantial IHT savings are available to married couples.
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