Steps to reduce IHT

Read on to find out how you can reduce the amount of inheritance tax you are charged.

Inheritance tax is charged at 40% on the value of the deceased estate which exceeds the threshold, currently £325,000. If the deceased left his/her home to children or grandchildren in their will then the threshold can be increased using the main residence nil rate band – which is currently £100,000 – to £425,000.

For married couples or civil partnerships, any unused threshold can be added to the surviving spouse/partner to be available on their death (meaning their threshold can be as much as £850,000).

steps that can be taken before death to reduce inheritance tax

– give assets away which will reduce the estate’s value on the date of death

– write a will which leaves assets to charity

– hold assets which obtain exceptions from inheritance tax

– take out life insurance.

Assets can also be given away which will reduce the estate’s value on the date of death. Lifetime transfers of assets fall into three general categories:

– transfers which are exempt from inheritance tax

– transfers which are potentially exempt transfers

– chargeable transfers, which are any other transfers of value.

AJN Accountants are specialists in helping contractors, freelancers and small businesses to save tax and time.

Please contact us for more information:

T: 020 3866 8951

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