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Inheritance Tax

What is Inheritance Tax?

Inheritance Tax (IHT) is a tax applied to the estate of someone who has passed away. It is charged on the value of the estate above a certain threshold, which includes property, money, and possessions. In the UK, the tax is typically paid by the beneficiaries of the estate, with rates varying depending on the total value. As expert tax advisors, we assist individuals in planning for inheritance tax, helping to minimize liabilities and ensure that wealth is passed on efficiently to future generations.

Why is Inheritance Tax Important?

Inheritance Tax plays a significant role in estate planning, as it determines how much of an estate’s value will be taxed when someone passes away. Proper planning can help reduce the amount of IHT due, ensuring that more of the estate is passed on to loved ones. Early preparation and advice from a tax advisor are essential to avoid unexpected tax liabilities and to preserve wealth across generations.

Benefits of Planning for Inheritance Tax

  • Minimizes the amount of tax due on an estate
  • Ensures wealth is passed to beneficiaries efficiently
  • Reduces the financial burden on heirs
  • Enables the settlor to plan for charitable donations

Key Considerations for Inheritance Tax Planning

  • Understanding the inheritance tax thresholds and exemptions
  • Making use of lifetime gifts and reliefs
  • Ensuring that all assets are accurately valued
  • Planning for complex family situations and trusts

Who We Are

Tax Advisors is a leading UK-based tax consultancy

Tax Advisors is a leading UK-based tax consultancy powered by a team of Chartered Tax Advisors (CTA), Chartered Accountants, and Former HMRC Inspectors. With decades of combined experience, we specialize in providing expert tax solutions tailored to individuals, businesses, and organizations’ unique needs.

  • At Tax Advisors, we combine technical expertise with a client-focused approach, ensuring every solution we provide is aligned with your financial goals.
  • Trust us to transform tax challenges into opportunities for growth and success.

Our team's deep understanding of the UK tax system

Our team’s deep understanding of the UK tax system and proactive approach allow us to deliver tailored solutions that ensure compliance and optimize your tax position. Whether navigating complex cross-border tax issues, seeking to minimize your tax liabilities, or facing an HMRC investigation, we provide the clarity, confidence, and results you need

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Key Features of Inheritance Tax

Inheritance Tax is often seen as one of the most complex areas of tax law, but with expert guidance, it can be managed effectively. The key to reducing inheritance tax is through careful planning, making use of exemptions, and structuring an estate in a way that minimizes tax exposure.
Inheritance Tax Threshold:
The tax-free threshold (nil rate band) is set at a specific value, and anything above that will be taxed at a certain percentage.
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The threshold can be higher for married couples or civil partners, and exemptions like the family home allowance can also reduce the tax bill.
Reliefs and exemptions:
There are various reliefs available, such as Business Relief and Agricultural Relief, that can significantly reduce IHT for certain types of assets.

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Tax Advisors FAQs

Frequently asked questions

  • What is the current rate of Inheritance Tax in the UK?

    The standard rate of inheritance tax is 40% on the value of the estate above the threshold, but
    there are ways to reduce this amount through careful planning.

  • Are there exemptions to Inheritance Tax?

    Yes, there are several exemptions, including the spousal exemption, charitable gifts exemption,
    and the family home allowance for qualifying properties.

  • Can I reduce my Inheritance Tax liability with gifts?

    You can make gifts during your lifetime to reduce your estate’s value. However, there are rules
    about how long before death the gifts must be made for them to be exempt from IHT.

  • How can a trust help with Inheritance Tax?

    By placing assets into a trust, you may reduce the taxable value of your estate. Trusts can be
    part of an effective estate planning strategy to minimize IHT.

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