Editorial:

Death & Taxes

Benjamin Franklin famously said "In this world nothing can be said to be certain, except death & taxes". Unfortunately, one tax in particular, Inheritance Tax, typically combines the two together.

Inheritance Tax (IHT) planning is one aspect of financial planning that is often neglected. Currently, upon death each individual has a 'nil rate band' allowance which is exempt from IHT. For 2009/10, this stands at £325,000 but often the home represents a large proportion of this allowance alone. Any excess above the allowance is then taxed at 40%. Clearly, this can prove particularly expensive and any action that can be taken now to mitigate future liabilities should be considered.

As you may be aware, transfers between spouses on death are exempt from Inheritance Tax. Meaning that where one spouse leaves some or all of their Estate to a surviving spouse on death, any unused 'nil rate band' allowance will be passed on to the survivor in full. The survivor then has up to a double allowance available to offset against their Estate on Death.

With careful but relatively straightforward planning, your tax liabilities can be reduced or perhaps even avoided entirely. If you would like to discuss your circumstances in more detail and how steps can be taken to potentially reduce your Inheritance Tax liability, please do contact the office for a free of charge initial interview.