When planning your estate, beware of inheritance tax. If your estate’s value eclipses a specific threshold (£325,000 at present), when you pass away, your estate will be required to pay a 40% inheritance tax on the remaining fixed assets. Combined, couples can currently benefit from an inheritance tax threshold of £650,000 at present, assuming that neither you nor your partner can utilise other exemptions.
We should note that in 2017, the UK government will phase in another tax free band for your main residence. This will initially be set at £100,000, rising to £175,000 in 2020, so you may be able to bequeath £500,000 before inheritance tax. You can further shield your assets via other exemptions, but many must be deployed seven years before your death, so it is wise to plan for inheritance tax now. Turner Little considers ways to mitigate the effect of inheritance tax on your estate.