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. Wills and probate lawyers are knowledgeable in helping keep tax on inheritance money down. Inheritance tax (IHT) is the amount of tax charged on the deceased person's assets or estate. After a certain rate, IHT can be around 40%, which is a lot of money. With high earnings and high inheritance in the city, wills and probate lawyers London have the experience to guide these kind of cases.
Inheritance tax - going deeper
Firstly, not everybody has to pay IHT. It is only applied if your inheritance including assets in trust and gifts is over a certain threshold. The tax is paid at around 40% on the amount over this threshold. There can be cases that are exempt from IHT:
Spouse/civil partner exemption - Your estate may not owe IHT on anything left to a partner that permanently resides in the UK, nor on gifts you may give to them.
Charity exemption - IHT isn't usually applied when you make a gift to a qualifying charity in your lifetime or through your will.
Potentially exempt transfers - Survival for seven years after making a gift means the gift will generally be exempt from the tax.
Small gift exemption - Covering gifts of up to 250 you can give to as many individuals as wanted.
Annual exemption - The giving of a gifts (or gifts) totalling 3,000 in a one-year period.
Wedding gifts - Monetary gifts up to a certain amount that is given to a newly married couple. Also applied to civil partnerships.
Business, Woodland, Heritage and Farm - When the deceased owned a business, farm, woodland or National Heritage property, some relief may apply.
When it comes to who pays the tax the law can be hard to understand, which is where wills and probate lawyers can use their expertise. Generally the IHT is paid by the executor or the personal representative of the deceased.
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.
Inheritance tax - going deeper
Firstly, not everybody has to pay IHT. It is only applied if your inheritance including assets in trust and gifts is over a certain threshold. The tax is paid at around 40% on the amount over this threshold. There can be cases that are exempt from IHT:
Spouse/civil partner exemption - Your estate may not owe IHT on anything left to a partner that permanently resides in the UK, nor on gifts you may give to them.
Charity exemption - IHT isn't usually applied when you make a gift to a qualifying charity in your lifetime or through your will.
Potentially exempt transfers - Survival for seven years after making a gift means the gift will generally be exempt from the tax.
Small gift exemption - Covering gifts of up to 250 you can give to as many individuals as wanted.
Annual exemption - The giving of a gifts (or gifts) totalling 3,000 in a one-year period.
Wedding gifts - Monetary gifts up to a certain amount that is given to a newly married couple. Also applied to civil partnerships.
Business, Woodland, Heritage and Farm - When the deceased owned a business, farm, woodland or National Heritage property, some relief may apply.
When it comes to who pays the tax the law can be hard to understand, which is where wills and probate lawyers can use their expertise. Generally the IHT is paid by the executor or the personal representative of the deceased.
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.
About the Author:
Wills and probate lawyers are worthwhile Speaking to if you want to understand more about Inheritance Tax planning. Lewis Nedas presents professional wills and probate lawyers London, for all the guidance you could need
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