How inheritance tax effects your beneficiaries
The subject of inheritance is a hot topic. Daniel Craig has both ‘shaken’ and ‘stirred’ the debate by stating he’ll be spending or giving away most of his fortune, rather than leaving it to his children. It’s an interesting point of view, made a little easier of course when you are a James Bond actor sitting on an enormous amount of wealth. You don’t need to be rich to use a financial adviser, most of us won’t amass those sums of money in our lifetime. However, this doesn’t necessarily mean you will avoid the issue of inheritance tax (IHT) if you feel it’s right to pass your wealth on to family members, children, grandchildren or friends.
It may seem that IHT impacts relatively few, but in 2019/20 HMRC collected more than £5.1 billion from thousands of families. The current threshold of £325,000 has been frozen until 2025/26, this move has been described by commentators as a stealth tax because the government is predicted to receive £6.3 billion in 2023/24*.
IHT is usually levied on the value of all the assets of your estate when you die, after deducting any liabilities, exemptions, and reliefs. Assets left to a spouse or civil partner of the deceased are usually exempt, as are assets left to a charity. However, it is possible to ethically and responsibly reduce or mitigate the impact of IHT with some astute planning, ensuring that more of the wealth you’ve worked so hard to accumulate is passed to the people who you decide deserve it most.