Inheritance Tax costs in the UK have risen to £200,000 – here’s how to cut yours.
According to the most recent estimates, IHT bills in the UK have risen to more than £200,000 on average. How may a bill be cut and assets be saved?
According to government estimates for the 2018/19 tax year, the average IHT charge in the UK was £209,502.
Inheritance tax is a tax levied on the estate of someone who has died and is transferring their assets to their heirs.
Property, certain things, and money are all examples of an individual’s assets, according to HMRC.
The regular Inheritance Tax rate is currently 40%, however it is only applied to the portion of an inheritance that exceeds the £325,000 threshold.
The financial services business NFU Mutual listed the best ways for Brits to reduce their IHT cost as part of its examination of the numbers.
One of the group’s primary recommendations to people is to only use their pensions when absolutely required.
Make it the last thing you spend because any money left in someone’s unused pension fund after they die is usually free of Inheritance Tax.
Sunak has warned that the triple lock must be removed from the state pension system.
IHT does not apply to pensions; however, it does apply to savings and investments.
Another piece of advice from NFU Mutual to the general public is to take use of the best business reliefs available.
Because to Business Property Relief, if someone leaves a qualifying business behind, they may be able to pass it on tax-free.
While a life insurance policy does not lessen an IHT cost in and of itself, it does provide a considerable sum of money to loved ones in the event of a death, which will help pay the charge.
Any life insurance policy taken out, however, must be written in a trust so that the insurance policy itself is not included in the estate.
NFU Mutual also encourages consumers to use gift-giving as a way to reduce their tax liability.
IHT-free donations from people’s estates are possible, with individuals eligible to give away up to £3,000 each tax year.
If you haven’t utilized your prior year’s allowance, you can request it from the previous year.
Many people are concerned about the tax, according to Sean McCann, a Chartered Financial Planner with NFU Mutual.
“Inheritance Tax is feared by.” Brinkwire Summary News, stated Mr McCann.