What is Inheritance Tax?

Inheritance Tax ('IHT') is a tax on everything you give away during your lifetime or upon death, subject to certain limits and exemptions.

The threshold for IHT is £300,000 (tax year 2007/8); £312,000 (tax year 2008/9); £325,000 (tax year 2009/10); £350,000 (tax year 2010/11). The IHT tax rate is 40% on amounts surplus to the threshold.

Who pays Inheritance Tax?

The tax on your Estate must be paid by your heirs before your assets can be released to them. This could cause temporary financial difficulties. Where IHT is attributable to property it may be paid by instalments - but the Inland Revenue will charge interest for the privilege!

How can writing a Will save Inheritance Tax?

Each person has a limit before IHT is levied on the Estate. By writing Wills in a tax efficient manner, some families can make maximum use of these limits.

For some couples with large Estates, Britannia Wills also offer a complete service enabling you to use your Wills as a vehicle to dramatically reduce any Inheritance Tax liability.

Careful planning can potentially save your family over £124,000 in Inheritance Tax.

Due to recent changes in legislation concerning Inheritance Tax (IHT) many previous IHT schemes have become ineffective should the surviving spouse (or partner) wish to remain in the family home. However, solutions remain available. Although a complex subject, in essence if the value of your joint Estate is in excess of £312,000 we can incorporate a Discretionary Will Trust into your Wills making use of two tax allowances

If applied correctly this enables assets, including equity from a property, to be released and subsequently placed into the Trust, thus maximising the effectiveness of each of your tax allowances (for a couple). Using a Will in this way can save your children or loved ones from inheriting a huge tax bill.