“The only certainty in life is death and taxes” Benjamin Franklin
At Bennett Oakley Solicitors, our lawyers can advise you on calculating and planning for Inheritance Tax, Capital Gains Tax, and Income Tax to be paid on Trusts.
Inheritance Tax Planning
With people living and working longer, coupled with the rise in house prices, inheritance tax planning is becoming more important than ever. If you leave an estate worth over £325,000 (the 2020/21 threshold) the estate may be liable for Inheritance Tax (sometimes known as death duties) calculated at 40% on any amount over and above the threshold. There is an additional Residence Nil Rate Band (£175,000 in 2020/21) available in certain circumstances.
There are ways to plan your affairs to reduce most, if not all, Inheritance Tax owed on your estate. This can save your loved ones tens of thousands of pounds (and sometimes a lot more). Examples of clever tax planning for death duties are:
- If you leave 10% of your estate to charity the tax rate is reduced to 36%.
- You can gift away part of your estate before you die, however, if you pass away within seven years of making the gift, the gift can be subject to inheritance tax. The first £3000 given away within any tax year is tax free.
- There is inheritance tax relief available for business assets, farms, National Heritage property and some important or famous art works.
- You can place your assets into a Trust, however, gifts into a trust over the £325,000 threshold can still be liable to inheritance tax so expert legal advice is a must when setting up a trust for the purposes of tax planning.
Capital Gains Tax Planning
Capital Gains Tax is a tax on the profit you make for selling an asset. Individuals, Trustees and Executors need to be aware of Capital Gains Tax when selling assets. Our lawyers can advise you on planning for Capital Gains Tax for Trusts.
Income Tax Planning for Trusts
We can advise you on the rules relating to Income Tax if you are an executor or a trustee. In particular, the rules relating to the taxation of Trusts are extremely complicated and we are able to advise you on how to calculate and return any Income Tax that may be payable.
If you would like to find out more about tax planning for Inheritance Tax and tax issues surrounding estates and Trusts please fill out our contact form or phone our office on 01444 235 232 to talk to one of our friendly staff.