Plans to increase the inheritance tax threshold to £1m was first pledged by the Conservatives seven years ago. This proposal made in the Tory manifesto has since been altered so that when pensioners decide to downsize in terms of property any potential children will not miss out on the tax break. This decision comes as George Osborne unveils plans to finally end inheritance tax on properties worth up to £1m.
This policy is said to take an estimated 94% of people out of the inheritance tax altogether. The current system means that individuals who inherit will have to pay a 40% tax on wealth over £325,000 for a single person or 40% on £650,000 for a married couple or civil partners. Therefore, from 2017 changes will see the current thresholds raised to £500,000 and £1m retrospectively. It is important to note that this increase will only apply to property and not other forms of wealth. This £175,000 increase is set to be called 'family home allowance'.
This change is set to come into force April 2017 and is to be funded by pension tax reliefs for those who earn over £150,000. In addition, the Chancellor will allow people who have owned valuable homes to defer their allowance until death, even if they moved out of the property decades earlier.
Stay tuned to find out more...
Showing posts with label inheritance tax. Show all posts
Showing posts with label inheritance tax. Show all posts
Tuesday, 7 July 2015
Wednesday, 3 June 2015
Make a Will to help your family avoid arguing
When famous actor Rik Mayall died last June intestate (without a Will), his family had to pay an unexpected inheritance tax bill. With an estate valued at £1.2 million, the family of Rik Mayall are facing an IHT liability of up to £60,000. With this mind, it is also important to note that you do not need to be a wealthy celebrity to leave your family with an unexpected and unnecessary IHT bill.
According to research conducted from Macmillan Cancer Support, an estimated 1 million Britons have had a serious family argument after a relative passed away without leaving a Will. Out of these 1 million Brits, nearly a fifth had said that the row had gone on to break up the family.
It seems however, that despite the dangers of dying intestate, almost 6 out of 10 UK adults have failed to set out exactly how they want their estate to be divided once they pass away. The main reason given for this was that they "just never got round to it".
In addition to the research conducted, 1 in 3 people who have already written a Will failed to include something they had promised to a loved one. Many have argued that dying intestate can also pile financial stress onto grief. Making a Will does not have to be expensive but it essential in helping to avoid family breakdowns and legal issues once you pass away.
In terms of IHT payments, research from the website Unbiased.co.uk has shown that Britons wasted £550 million in 2015 on unnecessary IHT payments by failing to make plans. Many have suggested that this vast amount of wasted money is due to a combination of an improving economy and rising house prices which may have resulted in more estates exceeding the £325,000 threshold.
Yet to come into force however, during the 2015 general election, the Tories pledged a new allowance relating to family homes which will effectively take the IHT threshold per couple to £1 million. Currently, everybody can leave £325,000 worth of assets tax-free. Anything above this amount will incur a 40% tax.
To find out more about making a Will or about Inheritance Tax simply click here.
According to research conducted from Macmillan Cancer Support, an estimated 1 million Britons have had a serious family argument after a relative passed away without leaving a Will. Out of these 1 million Brits, nearly a fifth had said that the row had gone on to break up the family.
It seems however, that despite the dangers of dying intestate, almost 6 out of 10 UK adults have failed to set out exactly how they want their estate to be divided once they pass away. The main reason given for this was that they "just never got round to it".
In addition to the research conducted, 1 in 3 people who have already written a Will failed to include something they had promised to a loved one. Many have argued that dying intestate can also pile financial stress onto grief. Making a Will does not have to be expensive but it essential in helping to avoid family breakdowns and legal issues once you pass away.
In terms of IHT payments, research from the website Unbiased.co.uk has shown that Britons wasted £550 million in 2015 on unnecessary IHT payments by failing to make plans. Many have suggested that this vast amount of wasted money is due to a combination of an improving economy and rising house prices which may have resulted in more estates exceeding the £325,000 threshold.
Yet to come into force however, during the 2015 general election, the Tories pledged a new allowance relating to family homes which will effectively take the IHT threshold per couple to £1 million. Currently, everybody can leave £325,000 worth of assets tax-free. Anything above this amount will incur a 40% tax.
To find out more about making a Will or about Inheritance Tax simply click here.
Thursday, 2 April 2015
What you need to consider when making a Will
When it comes to making or in some cases changing your Will, there are many things you need to consider. Discussing your Will with a qualified solicitor will also help you to ensure that your estate goes to exactly to who you want it to after your death. Prior to seeing your solicitor you should perhaps consider the following:
Who are the executors and trustees of your Will?
Always think carefully about who you would like to be your executor and trustees to your Will.
An executor is responsible for dealing with your affairs and implementing the terms of your Will. Your executor is also usually appointed to be trustee of your assets whilst your affairs are still being sorted. Full names and addresses should be given to your solicitor.
Do you have any children?
If you have any children under the age of 16, you should consider carefully as to who is going to look after them should you pass away. Guardians can also be appointed in your Will. Full names and addresses should be given to your solicitor.
Do you want to give any specific gifts or items?
Always consider whether you would like to gift money or a specific item to a particular person named in your Will. Make a list of the items and the amount of money you would like to gift as well as the names of the beneficiaries. Please note that all these details should be given to the solicitor.
Whats going to happen to your residuary estate?
The residuary estate is the remainder of your assets/property once any liabilities have been paid off as well as when any gifts or money have been given. Always give careful consideration as to who you would like to receive this. If you are intending to give to a minor child, any funds will need to be held in a trust by your chosen executor until they reach a particular age. This is usually between 18 and 25.
How much inheritance tax needs to be paid?
It is important to note that the current inheritance tax threshold is £325,000, although there are exemptions and reliefs available which can help reduce the amount of tax payable. Make a list of your assets and their value. This list should be given to your solicitor so that they can advise you on the best way to reduce inheritance tax.
Register you Will
Once your Will has been signed and dated, you should ask your solicitor about registering your Will. Once your Will is registered, it will protect you should it get accidentally lost or destroyed.
Where can I store my Will safely?
It is very important to store your Will in a safe place. Your executors should also be aware as to where your Will is being stored.
If you are thinking of storing your Will, we would suggest an online option as it will protect you should your home flood or should you become a victim of theft. My Online Vault is a fully secure, protected and interactive document management system where you store your documents online within your own online vault. Find out more here.
Do I need to review my Will?
Yes it is recommended that you review your Will at least every 3 years, although this should be done more frequently should your family or financial circumstances change. Depending on your situation a Will can either be changed via a codicil or it may need to be renewed altogether. Your solicitor will be able to advise you on this and what is best for your situation.
Do you want to leave money to charity?
Through your Will you can leave gifts to your chosen charity. Anything left to charity is exempt from inheritance tax. Whatever your charity, make sure it is clear in your Will and your solicitor is made aware.
If your thinking of making a Will, MTA Solicitors can help you! To find out how our dedicated team of Wills and probate solicitors can help you with your Will or protecting your estate simply click here. Alternatively, you can call us on 0208 437 0731.
Who are the executors and trustees of your Will?
Always think carefully about who you would like to be your executor and trustees to your Will.
An executor is responsible for dealing with your affairs and implementing the terms of your Will. Your executor is also usually appointed to be trustee of your assets whilst your affairs are still being sorted. Full names and addresses should be given to your solicitor.
Do you have any children?
If you have any children under the age of 16, you should consider carefully as to who is going to look after them should you pass away. Guardians can also be appointed in your Will. Full names and addresses should be given to your solicitor.
Do you want to give any specific gifts or items?
Always consider whether you would like to gift money or a specific item to a particular person named in your Will. Make a list of the items and the amount of money you would like to gift as well as the names of the beneficiaries. Please note that all these details should be given to the solicitor.
Whats going to happen to your residuary estate?
The residuary estate is the remainder of your assets/property once any liabilities have been paid off as well as when any gifts or money have been given. Always give careful consideration as to who you would like to receive this. If you are intending to give to a minor child, any funds will need to be held in a trust by your chosen executor until they reach a particular age. This is usually between 18 and 25.
How much inheritance tax needs to be paid?
It is important to note that the current inheritance tax threshold is £325,000, although there are exemptions and reliefs available which can help reduce the amount of tax payable. Make a list of your assets and their value. This list should be given to your solicitor so that they can advise you on the best way to reduce inheritance tax.
Register you Will
Once your Will has been signed and dated, you should ask your solicitor about registering your Will. Once your Will is registered, it will protect you should it get accidentally lost or destroyed.
Where can I store my Will safely?
It is very important to store your Will in a safe place. Your executors should also be aware as to where your Will is being stored.
If you are thinking of storing your Will, we would suggest an online option as it will protect you should your home flood or should you become a victim of theft. My Online Vault is a fully secure, protected and interactive document management system where you store your documents online within your own online vault. Find out more here.
Do I need to review my Will?
Yes it is recommended that you review your Will at least every 3 years, although this should be done more frequently should your family or financial circumstances change. Depending on your situation a Will can either be changed via a codicil or it may need to be renewed altogether. Your solicitor will be able to advise you on this and what is best for your situation.
Do you want to leave money to charity?
Through your Will you can leave gifts to your chosen charity. Anything left to charity is exempt from inheritance tax. Whatever your charity, make sure it is clear in your Will and your solicitor is made aware.
If your thinking of making a Will, MTA Solicitors can help you! To find out how our dedicated team of Wills and probate solicitors can help you with your Will or protecting your estate simply click here. Alternatively, you can call us on 0208 437 0731.
Thursday, 12 March 2015
Don't have a Will? Neither does 73% of the UK.
With January and February gone and March passing us by, its time to ensure that your Will is set up and says exactly what you want it to say for when you pass away. And for those of you who have a Will, when was it last updated and is it actually valid?
Latest statistics from the Law Society has revealed that the majority of people in the UK do not a have a Will. Results showed that a staggering 73% of 16-54 year olds do not have a Will, whilst 64% of over 55 year olds do. In addition to this, men are also more likely to make a Will than women.
The main reason given for not making a Will, is that they believe they have nothing of any value to leave. However, many people forget to account for their property when adding up the value of their estate.
Out of those who have a Will set in place, 47.2% stated that their reason for making a Will was due to the fact that they were now old enough or realised the negative impact by not having one. Many people were also revealed to have made a Will as a result of a divorce.
Divorces are often a common reason behind people creating a new Will or changing a Will through a Codicil.
Dying intestate (without leaving a Will), can often be a nightmare for the family members involved. As many as 23% of those surveyed believed that if they passed away without making a Will, their estate would automatically go to their family. This however is incorrect as in some cases intestacy rules will determine who inherits what. In some cases, the state may be entitled to the estate. In 2014, around £8m was received by the government due to those passing away without an estate.
So what are the Intestacy rules?
If you pass away without leaving a Will in both England and Wales, your property will be divided and distributed under the intestacy rules in the Administration of Estates Act. These rules were updated after new regulations came into force on 1st October.
If you are married or are in a civil partnership and you have children, the surviving spouse/partner will receive everything including personal possessions up to the value of £250,000. Anything above this value is then divided equally between the children when they reach 18 years of age and the spouse/partner.
If you are married or are in a civil partnership and you have no children, the surviving spouse/partner will receive everything.
If you are unmarried and have children, your children will receive everything once they reach 18 years of age. If you are cohabitating, your surviving partner will get nothing.
If you are unmarried and have no children, your estate will go to your relatives in the following order:
Inheritance Tax?
Making a professional valid Will can also reduce the amount of inheritance tax you will have to pay. Inheritance tax, is the tax payable on a property once you pass away. However, some can be passed on tax-free via the 'nil rate band'. The nil rate band for 2015 is £325,000.
Married couples and civil partners can pass on their property to each other tax-free. As from 2007, the surviving partner can use both tax-free allowances, providing one was not used at the first death. This means that the amount the surviving partner can leave behind is tax free up to £650,000.
If you're thinking of making a Will, the LawStore can help you! The LawStore offers a wide range of affordable and easy to use legal documents regarding your Will. For further information simply click here. If you would like to speak to an expert in regards to making or changing a Will call us on 0845 603 6544, for further information and advice.
Latest statistics from the Law Society has revealed that the majority of people in the UK do not a have a Will. Results showed that a staggering 73% of 16-54 year olds do not have a Will, whilst 64% of over 55 year olds do. In addition to this, men are also more likely to make a Will than women.
The main reason given for not making a Will, is that they believe they have nothing of any value to leave. However, many people forget to account for their property when adding up the value of their estate.
Out of those who have a Will set in place, 47.2% stated that their reason for making a Will was due to the fact that they were now old enough or realised the negative impact by not having one. Many people were also revealed to have made a Will as a result of a divorce.
Divorces are often a common reason behind people creating a new Will or changing a Will through a Codicil.
Dying intestate (without leaving a Will), can often be a nightmare for the family members involved. As many as 23% of those surveyed believed that if they passed away without making a Will, their estate would automatically go to their family. This however is incorrect as in some cases intestacy rules will determine who inherits what. In some cases, the state may be entitled to the estate. In 2014, around £8m was received by the government due to those passing away without an estate.
So what are the Intestacy rules?
If you pass away without leaving a Will in both England and Wales, your property will be divided and distributed under the intestacy rules in the Administration of Estates Act. These rules were updated after new regulations came into force on 1st October.
If you are married or are in a civil partnership and you have children, the surviving spouse/partner will receive everything including personal possessions up to the value of £250,000. Anything above this value is then divided equally between the children when they reach 18 years of age and the spouse/partner.
If you are married or are in a civil partnership and you have no children, the surviving spouse/partner will receive everything.
If you are unmarried and have children, your children will receive everything once they reach 18 years of age. If you are cohabitating, your surviving partner will get nothing.
If you are unmarried and have no children, your estate will go to your relatives in the following order:
- parents
- brothers and sisters (if parents have passed away)
- grandparents (no brothers or sisters)
- aunts and uncles (no grandparents)
- the crown (no living relatives)
Inheritance Tax?
Making a professional valid Will can also reduce the amount of inheritance tax you will have to pay. Inheritance tax, is the tax payable on a property once you pass away. However, some can be passed on tax-free via the 'nil rate band'. The nil rate band for 2015 is £325,000.
Married couples and civil partners can pass on their property to each other tax-free. As from 2007, the surviving partner can use both tax-free allowances, providing one was not used at the first death. This means that the amount the surviving partner can leave behind is tax free up to £650,000.
If you're thinking of making a Will, the LawStore can help you! The LawStore offers a wide range of affordable and easy to use legal documents regarding your Will. For further information simply click here. If you would like to speak to an expert in regards to making or changing a Will call us on 0845 603 6544, for further information and advice.
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