A person who is resident and domiciled in the UK is subject to inheritance tax (IHT) on his or her death. From April 2009, the first £325,000 has been charged at 0 per cent and the balance at 40 per cent. Certain gifts made during a person’s lifetime may also attract an IHT charge.
More and more people are realising that when the value of their home is added to all their other assets, the value of their estate falls into the IHT 40 per cent bracket. This means that it’s not just the extremely wealthy who are affected by IHT.
Many people think that making lifetime gifts will eliminate any IHT charge. However, if not handled carefully, such gifts could themselves trigger further tax liabilities such as Capital Gains Tax or Pre-Owned Assets Tax. At worst, the Inland Revenue may not accept that a valid gift has been made, and impose a tax charge on an asset a person no longer owns.
There are various tax planning strategies available to reduce a potential tax liability. These range from making use of exemptions and allowances (e.g. the annual exempt amount of £3,000) to the setting up of sophisticated trust arrangements.
Hill Dickinson’s tax and succession planning specialists have a wealth of experience in the effective management of a client’s affairs to minimise capital taxes both during their lifetime and on death. We offer proactive tax advice and documentation specially tailored to an individual’s needs, enabling them to:
- Protect their own financial security
- Effect a smooth transfer of wealth from one generation to another
- Retain control and flexibility over their finances
- Structure business assets in the most tax-efficient way possible
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