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What Is Inheritance
Tax Planning?

IHT planning essentially helps in effectively managing your funds so that the amount received by your beneficiaries is maximized. You may be able to reduce someone's tax liabilities after they've passed away. As a result of lowering such losses, each beneficiary will receive more money. To learn more about your options, you can consult a specialist.

 

If you plan to leave assets or money to your loved ones after your pass away, they may face your estate's tax bill. After deducting any debts and funeral expenses, your estate is defined as your property, savings, and other assets. Inheritance Tax is calculated at a regular rate of 40%. It is required to pay only on the part of your inheritance that exceeds the threshold.

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Ways To Approach
Inheritance Tax Planning

Always Look For Help

There is a tax threshold for IHT, below which you pay no tax because the rate is set at 0%. The basic threshold for 2021/22 is £325,000. Anything over this amount is taxed at a rate of 40%. You can be inheritance tax-exempt if you die within seven years of making the gift, and your total gifts to date (within the seven years) are less than £325,000. 

Gift Tax

There is a tax threshold for IHT, below which you pay no tax because the rate is set at 0%. The basic threshold for 2021/22 is £325,000. Anything over this amount is taxed at a rate of 40%. You can be inheritance tax-exempt if you die within seven years of making the gift, and your total gifts to date (within the seven years) are less than £325,000. 

Inheritance Tax
Allowance 2021-2022

There is a tax threshold for IHT, below which you pay no tax because the rate is set at 0%. The basic threshold for 2021/22 is £325,000. Anything over this amount is taxed at a rate of 40%. You can be inheritance tax-exempt if you die within seven years of making the gift, and your total gifts to date (within the seven years) are less than £325,000. 

Inheritance Tax
On Family Home

There is a tax threshold for IHT, below which you pay no tax because the rate is set at 0%. The basic threshold for 2021/22 is £325,000. Anything over this amount is taxed at a rate of 40%. You can be inheritance tax-exempt if you die within seven years of making the gift, and your total gifts to date (within the seven years) are less than £325,000. 

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Will I Pay Inheritance Tax?

Whether you must pay it and how much you must pay depends on the value of your estate. Estates are the value of your money, assets, and property (summed up). Thus, the value of your estate is the total value of your assets. An asset is anything of value you own, such as cash, investments, businesses, cars, life insurance payouts, etc.

What Exactly Is Inheritance Tax?

If your estate (all of your assets) exceeds a certain amount, your beneficiaries may be subject to pay what's called an inheritance tax, or IHT. The IHT nil-rate band allows you to leave up to £325,000 to your beneficiaries free of tax. Everything above that limit will be taxed at a rate of 40% in most cases. So not planning your IHT can result in a significant bill for large estates.

 

IHT planning essentially means reducing how much HMRC withholds from your legacy after death. This is what you need to know to get down to business. Start scrolling!

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Trusts And Inheritance

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A trust is an arrangement that helps people manage their assets (money, investments, land, or buildings). Multiple kinds of trusts exist, each with a series of tax regulations. Mainly these types of agreements involve three central characters:

  • The person who creates and places assets in a trust.

  •  The 'trust' or person in charge of the trust.

  • The beneficiary of that trust.

  • Suppose you place your money or property in a trust. When calculating your inheritance tax bill, it is no longer considered part of your estate. Additionally, different types of trusts may be taxed differently. So you should always consult with a personal or financial mentor for wise advice on which kind of trust is best placed in your finances.

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