Inheritance Tax (IHT)
In the event of your death, this tax may be payable by your heirs but bear in mind:
- Transfers between a husband and wife are exempt, provided they are both domiciled within the U.K.
- There is no tax to pay on the first portion of your estate (the zero-rateband ).
In practice, if you're a homeowner even with only modest other assets,thanks to rampant house-price inflation there's still a good chance you'llfall into the tax net.
But careful tax planning and a properly drawn up will can play a key role inavoiding or minimising the tax that will eventually be due.The easiest way to mitigate your IHT liability is to give away some of your assets.
IHT has been called a 'voluntary tax' because there are so many waysyou can give money away exempt from tax or potentially exempt - but make sure you keep within the rules.
Another method of minimising your liability is to put some of your assets intrust, so that in the event of your death, they automatically go todesignated beneficiaries, such as your children.
Trusts can be highly complex animals and if you're contemplating using one, you should seek expert advice. Call our Contact Centre on 0845 145 0145 for more information.