Due to the number of ways you can mitigate your tax burden the inheritance tax is an easy tax to avoid. One of the best ways is the nil rate band which allows you to leave up to £500,000 to each person without a tax penalty.
For those looking to take care of their families and heirs making use of tax reliefs is acceptable practice in addition to the use of trusts. Investors looking to make more money can also use EISs and a variety of investment tools for their finances.
The Inheritance Tax (IHT) has become a heavily debated issue in recent years as property, the main asset of many people has begun to gain in value at a rapid pace in recent years. In the creation of every political budget, pressure from every Budget and Autumn Statement look to make changes to the nil rate band sitting at £325,000 since 2010 as homes and other types of properties were devalued. As the Inheritance Tax was changed, many people saw it as a way to secure their wealth.
With the benefits of the IHT, financial planners are finding other means to help with estate planning. One way to help financial planning is to explore using trusts for life insurance. The idea here is that when the person passes away, the months an estate can be in probate are eliminated and the intended inheritors can access the estate funds right away. Other ways that the IHT can be avoided is through placing funds in many different kinds of investments that are subject to business property relief which lessens the amount available to IHT.
Finally, look to making multiple gifts to beneficiaries during your lifetime to reduce impact from the IHT. The only catch here is that if you pass away within seven years of making the gift, there is potential to be subject to the IHT tax liability.
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