Inheritance Tax – What do you need to know...
Senior Lawyer, Private Client
What is inheritance tax?
Inheritance tax is a tax that needs to be paid by a person or their estate and is most commonly paid when someone dies or when setting up a trust.
Does everyone pay inheritance tax?
No. Whether you will pay inheritance tax will depend on the value of the assets in your estate or the value of the assets you have transferred into a trust. When calculating the value of your estate, it is important to remember to include the value of any property that you own, and any gifts that you have made in the last 7 years that exceed your annual gifting allowances.
Why do I need to know about inheritance tax – that only happens when I die, right?
Wrong. It's a very common misconception that inheritance tax is only triggered upon death. There are other circumstances that can occur whilst you are alive that may require you to pay inheritance tax straight away (these are known as chargeable events and include circumstances such as creating certain types of trust). There are other events, such as giving away money or assets, that potentially trigger an inheritance tax payment in the future, depending on the date of your death (potentially exempt transfers).
What is the rate of inheritance tax?
There are three inheritance tax rates that will depend on who you leave your estate to. 40% is the highest rate, but some gifts to beneficiaries will pay a lower rate of 36% (if you meet certain requirements) or even 0% if the beneficiary is exempt or your estate is below the inheritance tax threshold.
How much inheritance tax will I pay?
This is personal to everyone and will depend on whether you are, or ever have been, married or in a civil partnership, have children, and who you are leaving your assets to when you die. It will also depend on the value of your assets. At Giles Wilson, we offer specialist appointments to clients to review their assets, personal circumstances and Wills to assess and answer the following questions:
- Will there will be any inheritance tax payable?
- If so, how much and when does this need to be paid by?
- Who arranges the payment of inheritance tax?
- Which of my assets will be used to pay for the inheritance tax?
- What happens if my estate does not have easy access to 'cash' assets to pay the inheritance tax?
- What can I do so that I pay less or no inheritance tax?
How can Giles Wilson save you inheritance tax?
There are lots of ways that we can save your estate thousands of pounds.
Having a tax efficient Will is one of the best ways of ensuring that you will save on inheritance tax. By having your Will made by a Solicitor, they will be able to advise you on the best way to ensure that you are qualifying for all of the inheritance tax allowances that you are entitled to. At Giles Wilson, you can easily arrange an appointment with one of our solicitors who specialise in Will writing, and meet with us in one of our offices or online to discuss your Will.
Planning for the future is also another great way to save on inheritance tax. Our estate planning appointments will help you understand the best ways to limit the inheritance tax bill.
Our Will and estate planning appointments are usually offered on a fixed fee basis, so you will know up front how much you will pay for the initial appointment and advice.
What are the penalties for late/non-payment of Inheritance tax?
There is a £100 penalty if inheritance tax is paid after the deadline, and a further £100 penalty if it is still not paid within 1 year of death. There will also be interest accruing on a daily basis, with the interest rate varying. HMRC will not allow Probate to be granted until an agreement has been reached for how the inheritance tax will be paid.
If you would like any advice about create a tax efficient Will or Estate Planning Advice, please contact Giles Wilson today on 01702 477106 or email [email protected] to arrange an appointment with one of our legal experts.
