INHERITANCE TAX

Anyone living in their own home in west London, and particularly in Chiswick, is almost certain to have assets with a value higher than the threshold for inheritance tax which is currently £325,000. Amounts over the threshold passing to non-exempt beneficiaries such as children, grandchildren and friends are liable for inheritance tax at 40 per cent.

Though there are frequent, loud calls for the threshold to be raised significantly, for the rate of tax to be reduced and for inheritance tax to be abolished altogether there seems little prospect of any of these happening. Most recently, the Conservative Party's manifesto commitment to raise the threshold to £1m was dropped as part of its coalition agreement with the Liberal Democrats. This could change if the coalition unravels or if the economy recovers faster than expected, but, in the meantime, there are unlikely to be significant changes to inheritance tax in the current climate of national financial austerity.

The solution is to find ways of reducing your inheritance tax liability. This is best done before your death but it can also be done afterwards. Click on the options at right or scroll down:

Minimising inheritance tax: before death[ TOP ]

This can be done through your will, by making allowable gifts and by planning the way your estate is distributed. It is possible to reduce the potential inheritance tax bill further through lifetime giving. These are complex issues which require you to consider all the options and their implications.

We advise you to take legal advice on what is best for you so you can be sure you have explored all the options.

What you should do

• Make a list of your assets (properties, shares, savings, investments, life assurance policies, endowment policies, pensions which pay lump sums on death, premium bonds, car, cash and anything else of value that will be counted as part of your estate).
• Make a list of your liabilities (mortgages, loans and debts).
• Calculate the difference between the two to estimate the size of your estate and to enable us to calculate your inheritance tax liability.

Minimising inheritance tax: after death[ TOP ]

Although we would never advise anyone not to worry about their inheritance tax liability before they die, under current tax laws there are ways of reducing an estate's liability after someone has died.

In many cases it is possible for a deed of variation to be drawn up changing the will to make it more tax efficient. This must be done within two years of the death.

If you are an executor or beneficiary to a will which you believe could be restructured to reduce the inheritance tax due, please contact us.