Inheritance Tax is a minefield, and one where the rules change frequently. Unless you are up to date with the changes, you can receive a hefty bill and one that could have been avoided.
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The average Inheritance Tax bill has reached £170,000*, a considerable sum being paid by beneficiaries into the Government's purse. But there are ways of reducing or avoiding paying this kind of sum.
Nationally we are paying approximately £470m per year in inheritance tax, but with careful planning, we can reduce this sum.
Unless you have planned ahead, your loved ones can face paying 40% on anything worth over the Inheritance Tax threshold of £325,000. The average value of a property is currently £272,000 with prices on the rise again, so this threshold is still below the value of many properties.
The Chancellor has stated that by 2020 a new rule will be phased in which allows parents and grandparents to pass on their home to their children, stepchildren or grandchildren with no duty to pay, providing the home is worth less than £1m. It is worth noting however that there are complicated stipulations that without professional advice could get missed.
With so many details to consider with Inheritance Tax, don't be lulled into thinking ignorance will protect you. The time when Inheritance Tax rears it's head, is often at a sad time, so avoiding making the situation harder is always good financial planning.
*All Figures from HMRC