Inheritance Tax in Essex
The death of a loved one can be a devastating experience. As a result, trying to figure out inheritance tax in Essex, for example, is the last thing that many individuals feel like doing during this chaotic time in their life. With that in mind, Andrew Douglas Wills and Legal Services have provided a summary of the law regarding inheritance tax that could impact upon you.
First, it is vital to understand the ‘tax-free threshold’, which is also referred to as the ‘nil rate band’. This threshold determines whether your loved ones will have to pay a tax on your assets when the time comes. The current tax-free threshold is £325,000 per person and this will remain the case until April 2018.
Therefore, if the assets that you or your loved ones inherit are less than £325,000 after monies owed are deducted, no inheritance tax will have to be paid. However, if the assets in question are above the predetermined amount, an inheritance tax of 40% will be charged. It is important to keep in mind that the first £325,000 will not be taxed. For example, if an estate is inherited with a total worth of £400,000, only the remaining £75,000 will be subject to an inheritance tax.
When looking at the inheritance tax example used in the preceding paragraph, 40% of £75,000 (£30,000) is clearly a large sum to pay in taxes. Because of this, many individuals take inheritance tax into consideration when they write their Will. This is because there are currently several exceptions which may apply to you and your circumstances that could limit your payment of inheritance tax in Essex.
By way of illustration, the law in this area currently provides that where someone is married or in a civil partnership and passes their nil-rate band to their spouse or partner then their surviving spouse or partner will have £650,000 to leave to their beneficiaries without having to pay any inheritance tax.
Donating money to a charity may also prevent your loved ones from being required to pay an inheritance tax as well. This is because any money that is donated to a charitable cause is removed from the estate before any inheritance tax is applied. For example, if an individual chooses to leave half of their estate to a charitable cause then that 50% will be removed so inheritance tax will only be applied to the remaining half. Allied to this it is also to be noted that if a person donates at least 10% of the net worth of their estate to a charitable cause, then the rate of inheritance tax is reduced from from 40% to 36%.
At Andrew Douglas Wills and Legal Services, we have both the knowledge and experience to help you understand inheritance tax in Essex and how to make sure that your loved ones pay the least amount of tax possible.
Contact Andrew Douglas Wills and Legal Services today via www.andrewdouglaswills.co.uk to see how we could help you to get your affairs in order to protect both yours and your loved ones best interests and, more specifically, with regard to the payment of inheritance tax in Essex
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