After a lifetime of hard work and sensible money management you might be planning to pass on your wealth to close family and friends. But unless you have planned for it, Inheritance Tax (IHT) may take a large bite out of what you leave them.
Inheritance Tax is usually paid on an estate when somebody dies. It’s also sometimes payable on trusts or gifts made during someone’s lifetime. Most estates don’t have to pay Inheritance Tax because they’re valued at less than the threshold (£325,000 in 2013-14). The tax is payable at 40 per cent on the amount over this threshold or 36 percent if the estate qualifies for a reduced rate as a result of a charitable donation.
While often overlooked, good Inheritance Tax planning is vital for you to ensure your wishes are carried out in the most effect and effective way.