Do I have an Inheritance Tax Problem?

Inheritance tax was always an issue for the rich, but don’t feel too sorry for them…. They’re rich and they also have financial advisers to make sure their estate was managed well and their nearest and dearest weren’t left with a big bill. 

However, with the way house prices have gone up over the last 3 decades millions of people are now at risk of leaving behind hefty tax bills.  If you’ve got assets of over £325,000 then you could have a bill.

We each get £325,000 allowance for our estate where there will be no tax payable.  It’s called the Nil Rate Band.  The good news is that if you are married or in a civil partnership then when your partner dies they can transfer their unused nil rate band to you. (But you must let HMRC know after that person dies).  So as a married couple you can have an estate of £650,000 with no tax bill. 

For lots of people their property still goes above this number, but there is some more good news.  If you are leaving your house to your children (direct descendants) then you will each get an extra £175,00 allowance.  Which along with your nil rate band will give you £500,000 each.

If this is sounding complicated, then unfortunately it’s the tip of the iceberg with inheritance tax.  The thing to consider though is if all your worldly possessions add up to more than £325,000 it’s worth finding out whether you’ve got an inheritance tax liability.  Mainly because finding out early allows us to do lots of things to solve thew problem.  There are allowances for gifts and there are things you can do with your property to put it into your children’s names.  There are also investment bonds and Trusts that can be written to allow you to still get an income from your investments whilst passing the asset to your children.

I love talking to people about their estate and talking through options.  Parker Financial Advice are independent (IFAs) based in Cheltenham, who choose products from the whole of the market.