Is Inheritance Tax Planning for You?

Some people assume that inheritance taxes affect only the wealthy, but this is no longer true. Soaring property prices in many areas of the UK mean that many of us risk leaving our loved ones with hefty tax bills when we pass away. The good news is that it's possible to lessen its impact — and even pay none at all, in some cases — using inheritance tax planning. 

What exactly is inheritance tax? In simplest terms, it refers to tax paid on the assets that are left by someone who has died. It is computed after allowances and debts are deducted.  Assets may include investments, cash in the bank, properties, vehicles, businesses, life insurance pay-outs, etc. 

When you die, the government assesses how much your estate is worth and deducts any debts from the total to determine your taxable assets. Your estate — based on current laws — will have to pay a 40% tax on anything above the inheritance tax threshold of £325,000, or 36% if you give a minimum of 10% to charity. However, if you are passing your family home to a linear descendant you may be able to increase that threshold by another £100,000, rising to £175,000 by 2021.

However, the values of many family homes now exceed the threshold value — and this conundrum can trap you into giving much of your wealth to the state instead of to your heirs. Without any inheritance tax planning, your children may be forced to sell the home or other assets to pay the bill.

Inheritance tax planning can help you to keep your hard-earned money in your family. By putting preparations in place as early as possible, you can substantially trim down your inheritance tax liabilities — and, in some cases, even eradicate it completely. 


Talk to an estate planning consultant to understand your options. MVL Wills and Trusts can help you to plan ahead for what happens to your estate after you're gone. Call Andrew Mathias on 01424 577070 or email for a free consultation.