Tax Planning
There are three main taxes to be considered in the context of wills and estate planning: Inheritance Tax,Capital Gains Tax and Income Tax:
- Inheritance Tax is charged on the value in excess of £325,000
(Nil Rate Band, tax year 2009/10) of a person’s estate at a rate of
40%. In some circumstances assets (property, money and valuable
possessions) passed on during a person’s life, and assets in trusts,
can also be subject to Inheritance tax
-
Any assets passed between spouses, or registered partners, either
during their life or on death of the first, are not subject to
Inheritance Tax at that point. When the second person dies that
person’s estate benefits from the first person’s Nil Rate Band, to the
extent not utilised on the first death, as well as their own.
-
Some assets, such as the proceeds from life insurance, may be brought
into the estate of a survivor and so may be later subject to Inheritance
Tax
-
Assets given to other beneficiaries more than 7 years before the
donor’s death are not subject to Inheritance Tax, but the
gift may give rise to Capital Gains Tax at 18% on any gains
deemed to have arisen when the gift was made.
-
Most trusts are subject to Income Tax and Capital Gains Tax
and in some circumstances to a particular form of Inheritance Tax
periodically and when the trust is finalised.
- Generally the strategic use of trusts is necessary to minimise the tax burden and YourWill can help with the planning and the trust administration.
