I’m worried about inheritance tax

The rules on inheritance tax are not clear for most, many families end up paying this tax, when it could be mitigated.?

So what are the rules. A basic guide can be found here

What are the main options to mitigate or reduce this tax (the following represents a simplified view of some of the options that can be considered and cannot be construed as advice):

1. Spend it – have some fun with the money, whilst reducing your estates value along the way. Obviously live within your means as well.
2. Gift it – there are rules here, such as the 7 year gifting rule for tax and gifting allowance, but not all gifts need to be included in this rule and the tax level can reduce over time. Many are not comfortable simply gifting their money away, so it’s not a solution for everyone.
3. Trusts – using trusts can be a great way for many to set rules on how their money will be inherited and also can help reduce the potential tax burden. Trusts tend to sit outside of a persons estate, but can have their own tax structures. Note: Trusts are complex areas and we strongly suggest seeking advice.
4. Insurance – a policy such as a whole of life policy can mean the tax burden is covered by the insurance. It can be expensive and is certainly not an option for all, but other insurance solutions can also help.
5. Investments – certain investments can mean the invested money sits outside of the persons estate after two or five years. Investing in a pension might also be a solution for some, as a pension balance sits outside of a persons estate.
6. Gifts to Charity. The estate can leave money to charity, which can reduce the level of inheritance tax paid if certain rules are met.

A financial adviser can help guide you (or your family) through the best options. This is a tax very few should pay, advice can help save lot of money.

If you are not sure of the best way forwards, speak to us for professional advice.

Get it touch at?[email protected]?or use our contact page at?https://advisemyfinances.com/contact

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Disclosure: Please be aware that the above does not constitute financial advice. We recommend that you consider your existing investments, pensions and financial arrangements and then take advice.

The Financial Conduct Authority does not regulate tax advice and some forms of offshore investments. The value of investments and the income from them can fall as well as rise and you may not get back the full amount you invested. Past Performance is no guide to future performance.

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