Inheritance Tax
“Inheritance Tax; – it is, broadly speaking; a voluntary levy paid by those who distrust their heirs more than they dislike the Inland Revenue.” – Roy Jenkins
Introduction to Inheritance Advice from RAE Financial Advisory Services Ltd
Passing on your legacy or receiving an inheritance can be a transformative event, providing you with unexpected wealth but also new financial responsibilities.
Please note that you work and pay income tax on your hard-earned income, You save and you pay tax on your savings. You die and you still pay 40% inheritance tax on your wealth if above £1m as it stands currently.
Managing an inheritance wisely requires careful planning and informed decision-making and many people choose to seek out inheritance advice from a financial advisor. This is because the house prices increase, the freeze on the Nil Rate Band NRB of £325,000, and the limitation on the Residential Nil Rate Band RNRB
What is inheritance Tax (IHT)
The government levies tax on the value of a person’s estate, if their estate is worth more than the Nil Rate Band. The IHT ‘Nil Rate Band’ (NRB) is currently £325,000 and many people are still getting caught in the trap of property inheritance tax as the threshold has not kept pace with the inflation of property prices, and so is affecting more and more people.
There is also an additional ‘main residence’ allowance (‘Residential Nil Rate Band’ (RNRB)) which applies if a person’s home is given to their children (including adopted, foster, or stepchildren), surviving husband or wife, or grandchildren. This is set at £175,000 and is added to the IHT threshold providing a total allowance of £500,000.
When a relative dies and leaves an estate worth more than £325,000 or £500,000 if the ‘main residence’ allowance applies, families are required to pay tax on the amount above the NRB (and RNRB if applicable) within six months. After that, they are charged interest at a rate. However, there are ways to lessen the burden of property IHT.
When you die, you would likely wish to leave as much as possible for your loved ones. Unfortunately, this is often not as simple as you might expect. HM Revenue and Customs (HMRC) will apply a 40% tax to the value of your estate over and above that of the NRB (and RNRB) that applies at the time of death.
No IHT is applicable on ‘inter-spousal transfers’ (money/property/assets that are bequeathed by one spouse (or civil partner) to the other.
Your estate could include more than you originally realise. It is often easy to dismiss IHT as something that may not affect you as your property may not be over, or much over, the IHT threshold. However, with all your other assets, such as investments, life cover, bank accounts, and potentially your pension as well as physical property such as cars, furniture, and family heirlooms, many estates are considerably over the threshold without the individuals being aware of it.
For assets passed between spouses and civil partners, the nil rate band allowance will be passed along with the assets. This gives a couple available allowances (nil rate bands) of up to £650,000, which increases to £1,000,000 with the addition of the ‘main residence’ allowance detailed above.
HOW RAE FINANCIAL ADVISORY SERVICES LTD CAN HELP
An inheritance can consist of various assets, including cash, investments, property, and more. Each asset comes with its own set of considerations, from tax implications to investment strategies. RAE Financial Advisory Services Ltd can help you understand the full scope of your inheritance and develop a tailored plan to manage it effectively.
How Can We Help You Make the Most of Your Inheritance
WE WILL HAVE A COMPREHENSIVE FINANCIAL REVIEW WITH YOU
TAX PLANNING AND OPTIMISATION
INVESTMENT MANAGEMENT
We will provide expert advice on how to invest your inheritance for long-term growth, helping you to diversify your investments, minimise risks and maximise returns.
We will monitor your investments and make adjustments as needed to ensure that your wealth continues to grow outside your estate.
Inheritance Advice FAQ
HOW CAN RAE FINANCIAL ADVISORY SERVICES LTD HELP ME MANAGE MY INHERITANCE?
WHAT ARE THE BENEFITS OF WORKING WITH RAE FINANCIAL ADVISORY SERVICES LTD?
HOW MUCH DOES IT COST TO WORK WITH RAE FINANCIAL ADVISORY SERVICES LTD?
The amount of tax we save you in tax and manage your risk far outweighs our cost.
Start Your Inheritance tax planning Journey with RAE Financial Advisory Services Ltd
Take control of your future today by partnering with RAE Financial Advisory Services Ltd. Contact us today on 07957656773 to schedule a free no obligation consultation and discover how our experienced financial planners can help you achieve your financial goals and build a secure future for yourself and your loved ones.