Plan carefully to reduce the impact of inheritance tax
Even modest estates can be hit by inheritance tax
Inheritance tax is not just a concern for the seriously wealthy - it is a general worry for many people. Quite simply, Inheritance Tax (IHT) is the tax your estate pays when you die although it can also be charged on certain lifetime gifts.
Unlike many other taxes however, there are a number of things that can be done to ensure that as much of your wealth as possible can be passed on to your family and friends and not the taxman.
Today, even modest estates can be hit by Inheritance Tax. In the 2007-2008 tax year, only estates worth less than the £300,000 threshold will escape the Inheritance tax net. This might seem a lot of money, but really it's little more than the cost of an average home in the Home Counties. If your estate is over £300,000, therefore, subject to certain other exemptions and reliefs it bears Inheritance Tax at 40% on the excess.
So unless you plan carefully it is possible that your estate too will be hit by inheritance tax. It may seem very unfair that even after death we are still pursued by the taxman. But plan now and you could cut the amount of inheritance tax your estate has to pay - meaning there will be more to pass on to your family and friends.
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