GB News: Simon McCoy rules out Strictly appearance
We use your sign-up to provide content in ways you’ve consented to and to improve our understanding of you. This may include adverts from us and 3rd parties based on our understanding. You can unsubscribe at any time. More info
For the 2018/19 tax year, Government figures found that the average IHT bill in the country came to a whopping £209,502.
Inheritance Tax is commonly charged on the estate of someone who has died and is passing on their assets.
According to HMRC, an individual’s assets can include their property, certain possessions and money.
Currently, the standard Inheritance Tax rate is 40 percent, however it is only charged on the part of an estate that’s above the threshold of £325,000.
As part of NFU Mutual’s analysis of the figures, the financial services firm outlined the best ways that Brits can lower their IHT bill.
Don’t touch pensions
One of the group’s main tips for people is to avoid dipping into their pensions unless it is absolutely necessary.
Commonly, any money that is left in someone’s untouched pension fund when they die is free of Inheritance Tax so make it the last thing you spend.
READ MORE: State Pension: Sunak warned triple lock ‘has to go’
Pensions are free from being taxed through IHT, while savings and investments are subject to it.
Use business reliefs
Another tip from NFU Mutual to the public is to utilise the best business reliefs to their advantage.
If someone leaves a qualifying business behind then they may be able to pass it on tax free because of Business Property Relief.
State pension: You may get up to £358 per month for back pain [INSIGHT]
Lloyds Bank issues warning as new text scam attacks Britons [WARNING]
‘There may never be a return to normal’: Global inflation risks emerge [EXPERT]
Get life insurance
While a life insurance policy does not reduce an IHT bill in of itself, it does provide a large amount of money to loved ones after someone passes away, which will help pay the bill.
However, it is absolutely vital that any life insurance policy taken out is written in a trust so that the insurance policy itself is not included in the estate.
NFU Mutual also advocates for people to take advantage of gift giving as a means of reducing their tax bill.
Certain gifts from peoples’ estates can be free of IHT, with individuals being able to give up to £3,000 away each tax year.
If someone has not used the previous year’s allowance you can go back to the previous year and get it.
Sean McCann, a Chartered Financial Planner at NFU Mutual, explained the concerns many have regarding the tax.
Mr McCann said: “Inheritance Tax is feared by many but paid by relatively few.
“But with the average bill in excess of £200,000, it can make a significant dent in a family’s wealth for those that do get caught in the net.
“With the tax-free allowances frozen for the next five years, rising asset prices and a heated housing market, a growing number of families will be impacted.
“It’s critical that families concerned about being caught by inheritance tax seek advice as early as possible. The earlier you plan the more options you have to mitigate any potential bill.”
The region with the highest average bill was London with £271,820, while the lowest region was Wales with £155,963, according to the latest figures.
Only 3.7 percent of UK deaths ended up in an IHT tax bill in 2018/19, however that percentage is expected to increase following Chancellor Rishi Sunak’s decision to freeze the tax-free allowances for the next five years to help pay for pandemic relief.
Source: Read Full Article