Business and Management

The Basics Things You Need To Know About UK Inheritance Tax

Whether one is a lively young being who still lives believing in their immortality or a more mature individual looking to the winter of their years in view of what will happen after we are gone is never fun. Most of us will give up the necessary planning until the very last moment just so we don't have to think about death in its entirety. You can find the right expert advice on inheritance tax planning and trusts in London.

Unfortunately, when it comes to things like taxes, failing to plan can cost you a lot of money that could have been saved. In England, we are subject to various taxes, some on our working lives, some on our purchases, and one especially on our deaths.

tax on inheritance

Inheritance taxes come into play when a person dies and their "property" is above the threshold set by the Chancellor (£325,000 for 2010-11). A person's "home" consists of all kinds of money in bank accounts, investments, real estate, and businesses, and even fairly wealthy business owners can do that. If your property is above the threshold, a forty percent inheritance tax will be paid on the amount above the threshold.

Lifetime gifts and trusts are also taxed unless they were made at least seven years before his death, so it's impossible to avoid taxes by simply distributing everything before death (unless you're unhappy.) However, there are ways to reduce your inheritance tax bill if possible under HMRC rules.

Even if the value of the property is above the threshold, there are situations where inheritance tax does not have to be paid, for example: If the property falls into the hands of the spouse and/or domestic spouse, it is usually exempt from inheritance tax, because it is a wedding favor. Note that any wedding gifts must be genuine and not for profit.