Read on to find out how you can reduce the amount of inheritance tax you are charged.
Inheritance tax is charged at 40% on the value of the deceased estate which exceeds the threshold, currently £325,000. If the deceased left his/her home to children or grandchildren in their will then the threshold can be increased using the main residence nil rate band – which is currently £100,000 – to £425,000.
For married couples or civil partnerships, any unused threshold can be added to the surviving spouse/partner to be available on their death (meaning their threshold can be as much as £850,000).
steps that can be taken before death to reduce inheritance tax
– give assets away which will reduce the estate’s value on the date of death
– write a will which leaves assets to charity
– hold assets which obtain exceptions from inheritance tax
– take out life insurance.
Assets can also be given away which will reduce the estate’s value on the date of death. Lifetime transfers of assets fall into three general categories:
– transfers which are exempt from inheritance tax
– transfers which are potentially exempt transfers
– chargeable transfers, which are any other transfers of value.