What to consider with rising Inheritance Tax

Inheritance Tax is a tax levied on the transfer of property and assets after a person's death. In recent years, there has been a significant rise in Inheritance Tax rates. This increase has many implications for individuals and families, and we’re here to help.

The current Inheritance Tax threshold is £325,000, a figure that was set way back in 2009 and one that, following Jeremy Hunt’s recent budget, will remain until at least 2028, according to Mature Times.

But due to rising levels of wealth, primarily linked to property, more and more individuals will undoubtedly face paying this tax in the future.

Reasons for rising Inheritance Tax

One of the primary reasons for the increase in Inheritance Tax is the growing wealth inequality. As the rich become richer, the assets they leave behind after their death also increase. Governments have recognised this trend and have increased inheritance tax rates to generate revenue.

Another reason for the increase in Inheritance Tax is the growing budget deficit of governments. Inheritance Tax is one of the few taxes that can generate significant revenue without affecting the majority of the population. Governments are, therefore, using Inheritance Tax as a tool to bridge the budget gap.

Implications of rising Inheritance Tax

The rise in Inheritance Tax rates has significant implications for individuals and families. One of the most significant implications is the reduction in inheritance received by beneficiaries. With higher tax rates, beneficiaries are likely to receive a smaller portion of the inheritance left by their loved ones.

Another implication of rising Inheritance Tax is the need for proper estate planning. Individuals and families need to be aware of the tax implications of their estate and plan accordingly. This could involve making use of tax-efficient investments and trusts to reduce the tax burden on beneficiaries.

With Inheritance Tax rising, families need to be aware of the implications. With proper estate planning and a clear understanding of the tax implications, beneficiaries can receive a fair share of their loved ones' inheritance. It’s important that we are not unfairly burdening families and individuals with high inheritance tax rates.

What to do next…

1. Make sure you read up on all the allowances and exemptions to ensure you’re managing your assets the best you can.
2. If you have any gifts to give while you’re organising your assets, this can greatly reduce your Inheritance Tax bill. Gifts of up to £3,000 in each tax year, known as your ‘annual exemption,’ are exempt from Inheritance Tax.
3. Make an appointment with a professional financial advisor, like a solicitor, to ensure legal procedures are in place for future preparation.

More information can be found here at GOV.UK.