Skipton Financial Services
Wednesday, September 21, 2016 - 9:23

How might your loved ones be affected by inheritance tax?

If, upon your death, your estate is liable for inheritance tax (IHT), sadly your loved ones will be unable to inherit what you’ve left behind until they’ve settled the outstanding IHT bill.

This is because the executor of your estate has the responsibility of paying this tax – and in many cases, this will be a loved one you can trust, such as a child or partner. Part of their responsibilities will be to execute your Will and settle an IHT bill – which could be up to 40% of everything above your nil rate band and potentially result in them having to pay thousands of pounds to the taxman.

For example, a married couple who have both passed away before April 2017 – with an estate valued at £850,000 – would potentially leave their loved ones liable for an £80,000 IHT bill (dependant on liabilities).

In many cases, the chosen beneficiaries would have to find that £80,000 to pay the taxman before they’re allowed to access the inheritance. At what would already be a difficult time, this problem could cause a considerable level of anxiety and stress.

Some areas of Inheritance Tax (IHT) Planning are not regulated by the Financial Conduct Authority.  Some IHT planning solutions put your capital at risk so you may get back less than you originally invested. IHT thresholds depend on your individual circumstances and prevailing legislation, both of which may change in the future.

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