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BLYTHE
FINANCIAL
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Inheritance
Tax is probably the simplest of all the taxes to calculate (principally
the value of your estate at the date of death, less £325,000
[from 5 April 2009] multiplied by 40% - with adjustments for
lifetime gifts - see below). But it is probably the most difficult
to plan for! |
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It
is such a personal matter influenced by all sorts of factors.
The main ones are: |
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•
How
much income you have and need
•
The size and type of assets in your estate
• Whether
you are married (no IHT is charged on an estate passing to
your spouse)
• Whether
there are unrealised Capital Gains in the assets
• The
needs and ages of children and grandchildren
• How
long you expect to live
• Your
attitude to losing control of your assets
• Your
attitude to paying Inheritance Tax
• Your
attitude to complex, expensive and sometimes inconclusive tax
advice |
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Some
people go to great lengths to avoid paying any Inheritance Tax,
others do not wish to lose control of their assets and their
estate ends up paying the tax. We like to see a reasonable balance! |
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The
main point to note is that Lifetime Gifts are free of any tax
(either on the recipient or on yourself) providing you survive
for 7 years from the date of the gift. |
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If
you do not survive the full 7 years, then the potential liability
will be met from the balance of assets in your estate. Only
if the estate has too little, would any tax become payable by
those receiving the gifts. The amount of any such liability
will depend on how many years you do survive after the gift.
The rate of tax starts to fall after 3 years. |
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Because
of these rules, your executors will need to know the date and
amount of all such gifts. |
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We
recommend that you have a page kept with your copy of your Will
setting out the date, the amount and the recipient of all significant
gifts. See the Inheritance
Tax Schedule on the Easy Life page of the Blythe
& Co section of the site. |
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This
is useful both for tax purposes and for keeping track of who
has received gifts so that you can ensure equality if required.
Finally, you can gift out of income, make £3,000 (plus
£250 per donee) annual gifts and a £5,000 wedding
present for your offspring; all of these are exempt from IHT.
Although these are exempt, it makes sense to record them to
create a complete record. |
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If
you would like to know more, please call us on 020 8876 1097.
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