Inheritance Tax Bournemouth Solicitors

Solicitors In Bournemouth Guide to Inheritance Tax... And Potentially Exempt Transfers. (PETs)

Inheritance Tax (IHT) is the money paid on your estate when you pass away.  It can also affect monies which are transferred into Trust funds during your lifetime.

Do you want to give hard-earned money to the TAX man?

Of course you don't!

Get in touch and I'll help you give it to your loved ones!

IHT is only paid on your estate if it is valued higher than £325,000 (2010/11).         

This is known at the "Nil RateTax Band".

Anything above the basic ‘Nil Rate Tax Band’ of £325,000 is taxed at 40 per cent.

For example, if you leave behind an estate worth £500,000 the tax bill will be £70,000 (40% on £175,000 – the difference between £500,000 and £325,000).

New inheritance tax rules for married couples and civil partners

Married couples and civil partners are allowed to pass their possessions and assets to each other tax-free and, since October 2007, the surviving partner is now allowed to use both tax-free allowances (providing one wasn’t used at the first death).

At the extreme, this effectively doubles the amount the surviving partner can leave behind tax-free without the need for special tax planning.

In most cases, Inheritance Tax must be paid within six months from the end of the month in which the death occurs, otherwise interest is charged on the amount owing.

Potentially Exempt Transfers (PETs) - are gifts made during your lifetime, exceeding the annual gift allowance of £3,000 but within the Nil Rate Band.

Provided the donor survives for a further 7 years, no tax will be payable and the gift becomes a PET.

In the event of death within the 7 years however, tax will be payable but if this occurs after 3 years, taper relief is available, thus reducing the amount of tax due.

A PET can be a highly effective way of reducing your IHT liabilities while simultaneously ensuring that your assets are passed to your intended beneficiaries.

Who Can I Give These ‘Gifts’ To?

During your life time it is possible to give a number of gifts away that are exempt from IHT.

There are a number of people (beneficiaries) who can receive these exempt gifts;

Husband, wife or civil partner (even if legally separated) owning a UK home.

UK Charities, UK Political Parties and selected National Institutions.

What Gifts Are Exempt?

Some gifts are exempt from Inheritance Tax because of the type of gift or the reason for making it.

These include:

·         Wedding / Civil Partnerships Ceremony Gifts

·         Annual Exemption

·         Small Gifts

·         Normal Expenditure Gift

These gifts can be given during your lifetime or left as a wish in your Will.

Who Pays Inheritance Tax?

The 'personal representative' (the person nominated to handle the affairs of the deceased person) arranges to pay any Inheritance Tax that is due.

You usually nominate the personal representative in your will (you can nominate more than one), in which case they are known as the 'executor'.

If you die without leaving a will a court can nominate the personal representative, in which case they are known as the 'administrator'.

Can I Save Inheritance Tax In My Will?

The answer is almost certainly yes if you are over the £325,000 threshold.

The best thing to do is to call me so that I can discuss with you all your options concerning Inheritance Tax.

Everyone’s situation is different.

But one thing is common with most people. No one wants to leave 40% of their estate to the taxman.

So please telephone me today to for a free appointment where I can assess your liability and show you how you can keep your wealth in your family.

Telephone 0844 874 5377

Or email help@SolicitorsInBournemouth.com

 

Here's more on SolicitorsInBournemouth.com Estate Planning

Solicitors in Bournemouth Inheritance Tax Changes For Wealthy Clients Can Mean Lowering Tax And Keeping More Money For Your Heirs.

Complex changes to pensions rules have resulted in the potential to avoid inheritance tax.

Most people outside final salary or defined contribution pensions buy an annuity – a form of guaranteed income for life – with most of their fund. But a minority of pensioners choose to live off the income from the underlying fund, despite punitive taxes of up to 82pc which used to apply to the remainder of the fund if they died after the age of 75.

However, since April 2011, annuity purchase is no longer mandatory at any age and the tax rate applied to income drawdown funds left unspent by pensioners who die at any age has been reduced to 55pc.

Beats Giving Away 100% of Your Money

While that compares unfavourably with IHT at 40pc on estates in excess of £325,000 per person or £650,000 per married couple or civil partnership, it still beats giving 100pc of the capital to a life company in return for an annuity especially if you want to pass assets to heirs.

Now Skandia, the pensions company, has devised a way of using the new rules to maximise the portion of pension savings which can be passed tax-free to heirs - but which will only be useful to those with very large funds. Those aged 55 and over,  who can show they have a ‘secure income’ of at least £20,000 a year can choose what to do with their pension fund under a new facility known as ‘flexible income’.

Minimise IHT Liabilities

The idea behind the £20,000 threshold for flexible income is to ensure that wealthy pensioners won’t be entitled to means-tested State benefits, even if they spend the rest of their savings. Once pensioners have satisfied the £20,000 de minimis requirement, they can divide the rest of their pension fund into separate segments  - before drawing tax-free cash equal to 25pc of each segment to maximise income and minimise IHT liabilities.

Adrian Walker of Skandia explains: “Flexible drawdown is new but wealthy individuals can consider using flexible drawdown as a way to deliver retirement income more efficiently from their unused pension savings, avoiding a potential 55pc tax liability.

“It is surprising the difference using flexible income can have from an estate planning perspective. A  person’s estate could be more than £20,000 better off initially if they received their retirement income using flexible drawdown. Magnify this by the significant sums some people hold in their pension savings and you can start to see the dramatic difference such planning can have.”

For Inheritance Tax And Estate Planning Advice please contact me at Solicitors in Bournemouth.

Dedicated to Your Family

Paul Solomons

Solomons Solicitors powers Solicitors in Bournemouth and is regulated by the Solicitors Regulation Authority No. 263260 Our Office address is 8  Seamoor Road, Bournemouth, Dorset, BH4 9AN

 

 

Paul Solomons

Solicitors In Bournemouth

help@SolicitorsInBournemouth.com

8 Seamoor Road

Bournemouth , Dorset , BH4 9AN

0844 874 5377

solicitors bournemouth probate bournemouth conveyancing bournemouth divorce solicitor bournemouth

This hCard created with the hCard creator.