Tax law makes up one of the most complex areas of the legal system. As such, wills and inheritance planning can have a huge impact in terms of tax law. When it comes to keeping tax down on inheritance money, wills and probate lawyers are experienced and knowledgeable. IHT – Inheritance tax – is the percentage of tax charged on the estate or finances of the deceased. Above a certain rate, IHT can be charged at 40%, which is a substantial amount. Wills and probate lawyers London particularly come into play here, where earnings and inheritance is often higher.
Inheritance tax – understanding more
Firstly, not everybody has to pay IHT. It is only due if your assets within seven years of death are over a certain threshold specified. The 40% (ish) tax is payable on the amount that goes over this baseline. There are cases that will be exempt from IHT:
Spouse/civil partner exemption – IHT may not be owed on your estate if it is left to a spouse or partner that has permanent residence in the UK. This also includes gifts you make to them.
Charity exemption – A gift made to a qualifying charity in your lifetime or will won’t usually be charged in line with IHT.
Potentially exempt transfers – If you give a gift and survive seven years after this, that gift will not be subject to IHT.
Small gift exemption – Gifts of up to 250 you are allowed to give to as many people as you want to.
Annual exemption – You can give up to 3,000 each year as multiple gifts or one gift.
Wedding gifts – Gifts up to a specified amount to a couple that are getting wed. Also applies to civil partnership.
Business, Woodland, Heritage and Farm – When the deceased owned a business, farm, woodland or National Heritage property, some relief may apply.
When discussing who should be paying the IHT the law can get complicated, which is where the expertise of wills and probate lawyers comes in handy. In most cases, the IHT will be paid by the personal representative of the deceased or executor of the will.
If you are writing a joint will with a partner or spouse, the law pertaining to inheritance tax can be quite tricky so for these instances in particular it is recommended to consult wills and probate lawyers to guide you through the process.
Wills and probate lawyers are worthwhile Speaking to if you wish to understand more about Inheritance Tax planning. Lewis Nedas presents experienced wills and probate lawyers London, for all the advice you could need