Paying tax in any shape or form is a part of life. However there is one particular tax which is extremely unpopular with the majority of the population. It is “Inheritance Tax” and is payable when you die. The UK has the second highest rate of Inheritance Tax in the world. This currently is set at 40% and is charged on that part of an estate which is in excess of £325,000 for those who are single or £650,000 for married couples.
Inheritance tax used to be a tax on the wealthy. As property prices have increased significantly over the last decade, the Middle class is now being stung by this tax. It is not surprising that many people are looking at ways in which they can legally reduce their Inheritance Tax bill. Perhaps you are considering whether you can avoid this tax by transferring your home to your children while you continue to live in the property.
Unfortunately, this is not a solution and can lead you into hot water! If you gift your home to your children and continue to live in the house rent free, you are still benefiting from the property. This means that when you die, even though you do not legally own the property, it will be seen as part of your estate and you will have to pay inheritance tax on that property.
There are only two instances where you can avoid paying Inheritance Tax after you have transferred your home to your children. These are as follows:
Estate planning with a view to reducing your exposure to inheritance tax is a complex area of the law. It makes sense for you seek professional advice to make sure it works to your advantage.
If you need legal advice on how to reduce the amount Inheritance Tax payable on your estate please contact me Sangeeta Moore on 020 8899 6620 or 07825 838 922. Alternatively you can email me at firstname.lastname@example.org We make home visits at no extra costs.