Why is inheritance tax planning important?

Mandatory inheritance tax can potentially cost those you leave behind hundreds of thousands of pounds when you die, but it’s also possible to legally sidestep vast amounts of it, or potentially pay none whatsoever.

The exact rules of inheritance tax can be complex to understand, but an expert financial adviser can help you put plans in place that ensure your estate is passed on according to your wishes.

What is inheritance tax and how much is it?

Inheritance tax is a dedicated tax on your estate after you die. The estate includes any material possessions you own, such as property, vehicles, works of art, and jewellery, along with any savings you have accumulated, investments you made in your life, and insurance policies. Once the total of all these assets has been calculated, any debts you have will be subtracted to find the final value of your estate. Precisely how much inheritance tax is paid will depend on the value of your estate when you die.

It’s worth noting that in certain circumstances, there may be no inheritance tax to pay. This is the case if the estate you leave behind has a value less than £325,000. It is also the case if you bequeath everything over £325,000 to a civil partner, spouse, a community sports club or a charity.

However, if these circumstances do not apply, then your final estate will be taxed by the government at 40% on everything above the established £325,000 limit when you pass away, or 36% if you decide to leave a minimum of 10% of your estate’s net value in your last will and testament to a charity.

It’s important to remember that the tax-free threshold of £325,000 may be considerably higher, in line with your personal circumstances. In some instances, it could be as high as £500,000 or even £1m.

There are multiple methods of reducing the tax bill faced by your beneficiaries, and an expert financial adviser can offer guidance on this. There are a wide range of different ways you can legally give money to charities and family members that are tax-free. Taking advantage of these exemptions will ensure your tax bill is lessened and more of your estate passes on to those you leave behind, instead of HMRC.

Experts in inheritance tax planning

There are many elements that make up the sum value of a person’s estate. The final bill that beneficiaries must pay can be complicated, so detailed calculations are necessary to establish any potential liability, and to limit or negate the potential tax bill when a person dies.

At Hartey Wealth Management, we deliver professional investment strategies that are expertly designed to either increase or generate wealth in the most tax-efficient way possible so you can leave more to your loved ones. If you require independent financial advice in Chester or Shropshire, or to create a plan for inheritance tax, don’t hesitate to get in touch today to discuss your needs.


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