Inheritance tax – it’s everywhere, and it’s unavoidable. However, there are things you can do to ensure you don’t have to pay more inheritance tax than you need to, and the earlier you start thinking about it, the better.
HMRC extended the tax-free allowance for inheritance tax recently, meaning that by 2020, the allowance will have increased by £175,000. However, many people will still be hit with inheritance tax upon the death of a loved one. Careful planning can prevent unexpected bills and use allowances to your advantage. Why should you start thinking about reducing inheritance tax liability sooner rather than later?
Your future might change
It’s a widely known fact that in the UK, people are living longer and working for longer as years go on. This means that it’s likely you’ll build up more wealth in the future, or you might be working for longer than you originally expect. This is why it’s so important to plan for your circumstances in the future, as you might have a larger IHT liability than you’re planning for.
Take your situation into account
Whether you’re married or in a civil partnership or not can have a big impact on your inheritance tax liability. If you share an estate with someone, this combines your nil-rate band to £650,000. You’ll need to think about this in order to ensure you’re planning correctly for the future.
Make use of gift allowances
Each year, you’ll have a gift allowance of £3,000 that’s free of IHT. If you don’t use this, it will carry over to the next year, however it only carries over for one year. This means you could lose the option to make gifts to loved ones without incurring IHT. Here, it’s much better to start sooner.
Speak to a financial adviser
If you are looking for financial advice on inheritance tax or reducing inheritance tax liability, then talk to our local financial adviser team today. Please call on 01926 492406 or email us at email@example.com to make an appointment.