ihtfree-1-5 - Yes I would like advice on IHT, please...

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2 Yes I would like advice on IHT, please contact me IHT Free I Inheritance Tax Panning Specialists What is Inheritance Tax (IHT)? This is tax due on your estate after your death; if your estate is valued above the tax threshold 1 then the tax must be paid even if it means selling your former main residence to the detriment of family residing there, although it does not apply to inheritance by your spouse or civil partner. In the UK, death has been taxed since 1796, then known as ‘death duties’. 1 £325,000 in tax year 2009-2010 The current tax, Inheritance Tax was introduced in 1986, when it replaced the old Capital Transfer Tax. In 2008/09 HMRC reaped over £3 billion, more than the duty on wine (£2.76bn) and only slightly less than the duty on beer (£3.1 bn). One reason why this figure is so high is due to the lack of suitable Inheritance Tax advice. In many ways is it the ultimate stealth tax. Planning ahead There is action that can be taken during a persons lifetime to reduce the eF ects of IHT. It is important to understand the fundamentals, and to make provision for IHT as soon as possible.
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3 Yes I would like advice on IHT, please contact me IHT Free I Inheritance Tax Panning Specialists Fundamentals IHT rates of tax There are currently three rates of IHT 0% for transfers within the nil rate band (£325,000 for tax year 2009-10). 20% of the excess for chargeable lifetime transfers that exceed the nil rate band. 40% of the transfers that exceed the nil rate band. Types of lifetime gift (transfers) There are two types of lifetime gift a person can make. Potentially exempt transfers (PETs) This is an outright gift to another individual or a gift to a bare/absolute trust. No immediate IHT arises on a PET. Chargeable lifetime transfer (CLT) A lifetime gift into a trust. If the gift causes the settler (giver) to exceed the available nil rate band. A 20% IHT charge arises on the excess. Taper Relief When a person makes a gift and dies within seven years of that gift, IHT has to be recalculated on the gift at death rates. However, where the person survives that gift by at least three years, taper relief will reduce any IHT liability by 20% per year, for each year after three years. Years between transfer and death Taper relief % Proportion of tax payable % 0 to 3 0 0 3 to 4 2 80 4 to 5 4 60 5 to 6 6 40 6 to 7 8 20 Transferable nil rate band With the nil rate band at £325,000 (tax year 2009 – 10 ) the relief for a married couple will be the total of the combined individual nil rate bands on the second death of the couple. Any couple with assets of more that £650,000 between them will need to face up to the fact that a tax charge of 40% will apply to the excess. For single persons who have not previously been married or in a civil partnership, assets that cause their estate to exceed £325,000 will be taxed at 40%.
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ihtfree-1-5 - Yes I would like advice on IHT, please...

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