The Tax man doesn’t miss when it comes collecting what he’s owed, whether you’re dead or alive. Preserving your wealth is just as important as building it, so its important to plan ahead to ensure that the wealth you create serves the intended purpose when you’re not longer here. Of course not everyone believes in passing on their wealth.
Some people are quite happy to spend everything they’ve made or even leave their estate to charity instead of their family. But for those who want to leave a legacy, the Tax man is entitled to 40% of your net estate ( property, cash, possessions) above and beyond the £325K tax free allowance.
So if you receive an inheritance of £500K, the Inheritance tax will be 40% of £175K ( £500K minus £325K) reducing your IHT bill usually involves a combination of, gifting your assets whilst you’re alive, which gives you the benefit of ‘Taper Relief’, arranging assets so that they fall outside of an your estate I.E Pensions, Trusts and Business Relief. You can also avoid the IHT bill entirely if you leave tour assets to your spouse, civil partner or a charity.