Wills and Probate

Administering an estate: Why you should plan carefully

Talk to us about inheritance tax planning

New stats have revealed that HMRC investigated 4,000 UK families last year, suspected of underpaid death duties.

Even some of the most diligent, well thought-out plans had to pay out after being probed.

HMRC now says it will dedicate a larger number of officials to investigate inheritance tax payments this year.

When someone dies

The first £325,000 of someone’s assets can be bequeathed tax-free. Above this amount, all assets are taxed at 40 per cent.

If the family home is left to children or grandchildren, you can achieve an extra allowance of £175,000.

DIY wills

With more people opting to do DIY wills, mistakes are becoming more common as a greater number of assets exceed the tax-free thresholds.

HMRC, which uses a personal information database, will investigate any family finances they can find including things you may not have considered, such as jewellery or artwork – which are often excluded from an estate – but can usually be found on insurance documents.

If payments you make on inheritance tax don’t match what HMRC expects it is due to be paid, an investigation can be launched.

Keeping a record of gifts

Zoe Fleming, our head of Wills, Trusts and Probate, says: “Gifts can be given to help families reduce IHT bills. This could include assets such as jewellery or antiques.

“However, these gifts are only tax-free if they were handed over more than seven years before death.

“Make sure you keep a record of what you give and when. Otherwise your family will need to prove this after you have passed away.

“Deliberate underpayments can end up costing you a small fortune. So it’s important to pay the right amount – and pay up if you realise you haven’t paid enough.”

Last week, the interest charged on unpaid inheritance tax rose to 6 per cent. It has risen eight times since 2.75 per cent 12 months ago.

Do you need our help?

We can tell you how you can reduce the amount of inheritance tax your family will pay.

It’s really important now more than ever that people seek IHT advice as soon as possible.

There are various ways you can reduce the size of your taxable estate during your lifetime, such as by making gifts, setting up trusts, charitable giving and other forms of planning.

If you need help with writing or updating a will, for the rest of this month we are donating 50 per cent of our fees for this to Derian House in Chorley.

The hospice cares for more than 400 seriously ill children and young people across the North West.

If you’d like to speak to a member of our Wills, Trusts and Probate Team, call us on 01772 799 600.

 

Article by Zoe Fleming

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