Jamie Parker Dip PFS, Independent Financial Planner, Kellands (Hale) Ltd, Chartered Financial Planning. Providing all aspects of financial advice: pensions, investments and protection. Here, he looks at some questions they regularly get asked….
What is Inheritance Tax (IHT)?
IHT is a tax on the estate of someone who has passed away. IHT is normally payable if the value of your estate is above £325,000 for a single person or £650,000 for a married couple. Any amount above these figures is taxed at 40%. With the average sold house price in Hale and Bowdon over £600,000 – property alone can present an issue for many.
Property prices keep going up, so why hasn’t the threshold changed?
Recently, the government announced a change to IHT thresholds for the first time since 2009. From April this year, many property owners will be able to use a ‘main residence, nil rate band’ which, subject to certain criteria, will increase their threshold by £100,000, rising to £175,000 by 2020. Unfortunately, this isn’t as straight forward as it sounds.
What can I do?
Due to the complexity of IHT, there is no ‘one size fits all’ answer. Good financial planning can reduce, or even eradicate, any inheritance tax issues that you may have, putting you then in control of when and how you pass on your wealth to your family. As important as reducing the tax burden may be, the succession planning of your wealth is often many peoples primary objective.