According to a poll carried out by financial website loveMONEY.com, 90% of people declared that they disliked inheritance tax, dubbing it the ‘most hated tax’ in the country.
The new statistics, which haven’t come as a shock to our financial advice team here in Morley, arrive after HMRC announced that more people across the country, including here in Yorkshire, were becoming more aware on how to avoid high inheritance tax bills.
Such loopholes, which were discussed in our most recent article, are the topic of conversation for many of our financial advisers, with the Heritage Wealth Solutions team seeing a strong demand from customers here in Leeds for help and advice regarding the expensive and complicated tax payment.
So what is inheritance tax?
Inheritance tax is paid by anyone who inherits an estate worth over £325,000 from an individual or £650,000 from a married couple. The tax percentage? A staggering 40%. That means if a single person dies and leaves behind an estate that is worth £400,000, the family member inheriting the estate will have to pay 40% tax on what is over the current threshold (£325,000). In this case it would be £75,000, meaning that you can expect to pay out £30,000 to the government.
Now all of this doesn’t seem fair, as we all pay income tax on the money we earn in the first place, so should we really be taxed again? Well, with that in mind the government has put in place reforms for inheritance tax bills, which will come into play from April 2017. What can we expect though? George Osborne has stated that from next year ‘family allowance’ will come into play, which is applied to children or grandchildren of the person that has died in regards to property.
This means that the threshold will be higher, meaning you will only pay 40% income tax on an estate worth over £500,000 from an individual and over £1,000,000 from a married couple. This should hopefully result in the inheritance tax bill for most people here in Yorkshire being reduced.
Inheritance tax is not only one of the most expensive tax bills around, but it’s also one of the most complex to get around. Thorough pre-planning when it comes to will writing can help with this, and that’s why our financial advice team always recommend that people come to speak to us sooner rather than later: it could save your family and loved ones thousands of pounds in the long run.
If you are a resident in the Leeds, York, Wakefield or surrounding Yorkshire area and want any advice on inheritance tax, please do not hesitate to call our Morley office on 0113 350 2080.