here are many ways that you can avoid paying those lofty Inheritance Tax payments - and do it legally!

Minimizing Inheritance Tax



Posted on: 6th June 2023

It is no secret that without proper guidance and support, UK families will lose thousands of pounds through Inheritance Tax (IHT). We also know that it is traditionally complicated to understand if you don’t have some degree of financial education. Although it is complicated to most, there are many ways that you can avoid paying those lofty Inheritance Tax payments – and do it legally! The way to go about this is to first contact your friendly local independent financial advisers Manchester, your helping hand in making those smart financial decisions and avoiding paying the price in tax.

Is Inheritance Tax a Thing?

Yes, Inheritance Tax is a very real thing. It is the tax on the estate of someone who has died, including all property, possessions and money.

Following a death, the executors of the Will must calculate the value of every asset and deduct any liabilities – also known as debt. The remainder is categorized as your ‘estate’ – and it is this element that is liable for Inheritance Tax. generally, anything with value is included in your estate for inheritance tax purposes. If the asset is jointly owned, then your share falls into the estate.

As well as property, it includes such elements as bank accounts, investments and shares, ISAs, antiques, jewellery, vehicles, life insurances not held in trust and gifts made over the last 7 years. The asset value is determined to be the value at the time of death.

Is There Anything That Doesn’t Fall Into the Estate?

Some assets will fall outside of the parameters of the estate and are not subject to inheritance tax. The most common are pension plans, life insurance held in trust and other trusts.

When someone dies, their outstanding debts are repaid through their existing assets, which does reduce the value of the estate for inheritance tax. Funeral expenses are allowable deductions from a person’s estate for IHT purposes also.

How to Minimize Inheritance Tax

Currently, you stand to pay an IHT rate of 40% on your taxable estate, but as we mentioned, there are many ways to reduce an estate value via legal means.

Making a Will is one of the simplest and easiest ways to make sure your money goes to the intended party. Without a Will, the government decides how your assets distribute under the rules of intestacy. Gifting is often overlooked as a highly effective way to reduce your estate, with no limit on the number of gifts you can make. Gifting whilst alive does require some careful financial planning, so it pays… well, saves to consult with your independent financial advisers Cheshire.

Depending on your circumstances, there are many other avenues to explore. However, we stress that you do talk with the best independent financial advisers UK before taking any steps to ensure you stay on the right side of legality.

Contact the team at Haven IFA today to learn more about minimizing your inheritance tax.