A simple five-step process can help people understand if they or their loved ones are likely to face Inheritance Tax bills, a busy conference heard.
The complex issue was broken down into bite-size chunks when members of the public attended the free event hosted by local accountancy firm Saint & Co at The Auctioneer in Carlisle.
It was designed to introduce Inheritance Tax as a subject and support guests with a basic understanding of how liabilities are calculated and what reliefs are available.
Tax partners Pauline Jackson and Alex Dent delivered the session.
Alex said: “We were thrilled with how well attended the session was – Inheritance Tax is clearly an issue of interest and concern to many.
“I think what surprises many people is how quickly, once assets are calculated, that an individual or married couple can find themselves with an estate that will be liable to inheritance tax.”
To get an indication of whether Inheritance Tax may apply to you, you can use the following five steps:
- Calculate the value of any properties you own, home and abroad. Online tools such as Zoopla can often be of assistance.
- Look at all monies you hold either in cash, investments or savings and add them up.
- Consider your other assets, for example, cars, jewellery, antiques, art and estimate their total value
- Add the totals together to get an estimated value for everything you own – this is your estate.
- Compare this against the basic allowances which presently stand at £325,000 for an individual or £650,000 for a couple. If you are over, your estate may be liable for inheritance tax,
Inheritance tax is levied at a rate of 40% on estates exceeding £325,000 in value. There is a supplementary allowance of £175,000 for a residence, but only if it’s passed to children or grandchildren.
Spouses have the option to combine their allowances, effectively raising the threshold to £1 million for married couples. This arrangement enables them to pass on up to £1 million without incurring any inheritance tax.
The tax generates in the region of £7 billion a year for the public purse.
Pauline said: “Inheritance tax is affecting more and more people, as property prices soar and personal wealth – especially among generations such as the Baby Boomers – continues to accumulate.
“Our five-point guide to checking whether you may be subject to Inheritance Tax is a basic starter. This is a very nuanced and complex area that requires specialist knowledge and advice.
“Hopefully those who attended our Inheritance Tax for Beginners session left with a decent understanding of what it could mean to them and the initial actions they need to take to work towards managing any liability.”
