AS CHANCELLOR Rishi Sunak gets ready to announce his Autumn Budget on October 27, concerns are growing that he could be about to cut the perks that come with Inheritance Tax (IHT) relief.
Inheritance Tax is a tax on the property, money and possessions of someone who’s died and, after the Chancellor froze the threshold at which people pay it in his 2021 Spring Budget, concerns are growing that he’s now getting ready to make further changes to pay for the COVID-19 pandemic.
Currently, Inheritance Tax must be paid if the entire value of someone’s assets exceeds £325,000, with the levy charged only on the part above this cut-off.
This threshold increases by an additional £175,000 allowance per person if an individual is leaving their main home to children or grandchildren.
There are things people can do now to make sure their loved ones pay less in tax when they pass away.
Chartered financial planner and founder of Green Wealth Planning, Makala Green, says now is the time for Britons to ensure their affairs are in order.
She says it is possible to save a huge chunk of money on Inheritance Tax by making the most of gifts and trust funds.
“It might mean spending money to avoid your future beneficiaries being taxed; there’s no point living on a tight budget if it’s not necessary.“
She said that leaving money to charity could end up saving people money on IHT in the long run.
“Money left to charity is free of IHT, and if you leave at least 10 percent to a charity, it could reduce IHT from 40 percent to 36 percent.”
Ms Green recommended people follow six steps to ensure they are not losing all their money in tax, and these are:
1) Make a will – First and foremost to benefit from the £175,000 allowance that can be used when leaving the main residence to children or grandchildren, Britons need to make a will.
2) Spend more money – An easy way to avoid paying IHT is to not get caught out in the first place.
3) Sell assets or downsize – Selling the main residence could benefit people
4) Gifting while alive – People can give gifts of up to £3,000 per year and carry any unused annual exemption forward for one year. They can also make small gifts. “Brinkwire Summary News”.