The current tax allowance for a single person who has died is £325,000. For a person who is widowed and where the tax allowance of their previously deceased spouse has not been used, this can be transferred to make a maximum allowance of £650,000. Although this sounds a lot, if the value of a house, followed by life insurances, investments and savings are added then this allowance can soon be eaten away — and when it is — anything over the threshold is taxed at 40%.
For example, on a single persons allowance and on an estate worth £500,000 the amount payable to the taxman would be £70,000. Also bear in mind that this is tax payable on things that you will have paid tax on already throughout your entire life such as income tax, value added tax and capital gains tax! It does not have to be like this! Our experts can work with you in devising a variety of perfectly legal and legitimate measures to mitigate inheritance tax liability. This can be through a variety of trust mechanisms and potentially exempt transfers which also make use of the full tax allowance that a person has.
Similarly, after someone has died there can again be things done that can serve to lower the tax burden that is faced by an estate depending on a variety of circumstances that can be present.