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Five ways to mitigate inheritance tax

When you die, you want your children to inherit as much of your wealth as possible to ensure it does not end up in the hands of HM Revenue & Customs. With meticulous planning and financial advice from professionals, there are ways you can avoid paying this tax in the UK. There are a number of steps you can take, from making a will to ensuring you stay below the threshold

Make a will

By making a will, you will ensure that your assets are distributed in line with your wishes; without a will, your estate may be divided in a different way. If your affairs are complex, it is advisable to seek the help of a solicitor to prepare the will.

Ensure you stay below the threshold or put assets in trust

The inheritance tax threshold in 2019/2020 is £325,000. Assets can be put in a trust, meaning that they will not be part of the estate. There are different trusts and they will be set up with trustees who will ensure the cash is paid out accordingly.

monthly payments

Leave a gift to charity

Inheritance tax rules will not apply to any donations to charitable causes. This is referred to as leaving a legacy. You can also slash the rate on the rest of your estate if you leave a minimum of 10 per cent of the net estate to charities.

Professionals who work in financial industries can benefit from IFA back office software. Streamlined processes, round-the-clock access and efficient processes are some of the key features of IFA back office software.

According to This Is Money, experts are demanding reform as families are being forced to complete paperwork to report the value of an estate, even if no tax is owed.

Make monthly contributions

In addition to putting funds into a trust, it is possible to make monthly payments from their surplus income into certain savings or insurance policies and place them in a trust. As long the payee can show that these payments are not having an ill effect on their standard of living, they will be exempt.

Make a gift to your partner

If you have a spouse or are in a civil partnership, you can gift what you own to your partner. The estate won’t have to pay tax on the value of such a gift. When you die, you want your children to inherit as much of your wealth as possible to ensure it does not end up in the hands of HM Revenue & Customs. With meticulous planning and financial advice from professionals, there are ways you can avoid paying this tax in the UK. There are a number of steps you can take, from making a will to ensuring you stay below the threshold.

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