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Have you considered tax planning?

As we come to the end of another year and you have some time to sit and contemplate, now is a good time to think about your tax planning and perhaps arrange an appointment for January to get this in place. Here are some important questions to consider in your tax planning:

Do you have a will?

If you haven’t yet put a will in place then it is important to do so. A will ensures that your estate, no matter how large or small, is dealt with according to your wishes and in a tax efficient manner. Putting one in place avoids intestacy rules and complications for loved ones after you are gone. It need not be an onerous process and we can provide advice and guidance on how best to set out your wishes.

Are you liable for Inheritance Tax?

This is payable at 40% on the value of your estate over £325,000. So if your estate is worth less than this there will not be any tax liability. Transfers between husband and wife are tax exempt, with any unused threshold added to the partners estate when they pass away resulting in an Inheritance Tax threshold of up to £650,000. Something else to consider is the rate of Inheritance Tax reduces to 36% if you leave 10% or more of the net value of your estate to charity.

Have you got life cover in place?

A life cover policy can provide the funds for loved ones to pay your Inheritance Tax liability. The policy can be put in place to provide an amount equal to the tax payable and this sum is placed into a trust exempt from Inheritance Tax when you pass away. The monies are paid on death so there is no need to wait for probate to be obtained and the beneficiaries can then use this to pay the tax due.

Do you want to give any monetary gifts?

You can gift up to £3000 per year tax free and any amount over this is also exempt from Inheritance Tax providing you survive for seven years after the gift is made. For much larger gifts if you pass away between three or seven years after making the gift then taper relief is given so less tax is due. You are also able to give as many small gifts of up £250 to different people as wish without any tax liability. Parents can give £5000 as a wedding gift, grandparents can give £2500 for this event whilst anyone else can give up to £1000 as a wedding gift without tax being payable.

Have you considered trusts?

You can use trusts in a very tax efficient manner to gift money when you die. There is a wide range available, some of which we detailed in our previous trusts blog post. Due to the complexity of these products, we’d recommend you contact us for advice if you are interested in putting these in place.

Flackwoods Solicitors can help with your tax planning and offer 30 minutes free advice. Call us on 01403 738777 or email info@flackwoods.co.uk for more information.

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