As people age, it’s all the more important to grasp the concept of inheritance tax and everything associated with it – understand what it is, what it means and how to avoid it to make sure you leave whatever wealth you may have to your family, instead of lining the taxman’s pockets.
It’s all too easy to put off learning about this sort of thing, with many people living for today instead of looking to the future. Why would someone young and healthy want to dwell on what will happen when they die, anyway? The answer is, because they are sensible. It’s not the most pleasant of subjects to discuss, but it’s a very important one.
When someone dies, the government analyses how much their estate is worth – including their property, investment and business. If this value exceeds the inheritance tax threshold, a 40 per cent tax is charged on anything above that threshold. Currently, the threshold, known as the nil-rate band, is £325,000. That means that if someone’s estate is equal to or less than £325,000, it’s tax-free and all can be left to their beneficiaries. Anything over £325,000 is charged at a rate of 40 per cent – that’s almost half the asset value! This just emphasises the importance of planning for Read the rest of this entry »