Inheritance tax: Financial advisor provides advice
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This comes as no surprise as the rise in house prices, and the rise in the investment markets have meant an increase in the volume and value of estates caught in the Inheritance Tax net. During an exclusive interview with Express.co.uk, Financial Advisor Emmauel Asuquo discussed the importance of planning for retirement to ensure people pay the least amount of Inheritance Tax possible.
He said: “It’s hard to reduce your Inheritance Tax with a property, it’s a lot more difficult. These are things people need to think about.
“I’ve had clients that have had to sell the property they are in and if they want to stay in that area, they can get something smaller.
“They put themselves under their allowance and they can use the money that they have to give to family members and see their money.
“If you can give your money while you are still alive, you get to see the benefits.
Retirees may choose to give gifts early to see their grandchildren benefit (Image: GETTY)
“You can see your grandchildren benefitting, you get to see your children benefitting.
“Isn’t that better than waiting until you’re gone?”
Inheritance Tax is a tax on the estate that allows the deceased to leave their property/possessions with their loved ones once they die.
The standard Inheritance Tax rate is 40 percent. It’s only charged on the part of your estate that’s above £325,000.
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This rate is something which Mr Asuquo branded as “crazy”.
He added: “Imagine if you’re a 40 percent taxpayer, you paid 40 percent when you were making your money in tax, and you pay 40 percent when you die as well.
“When it comes to IHT, I want everyone to understand it is a voluntary tax so it’s a tax you are choosing to pay.
“One thing we all know is that we are going to die, what we need to look at is how do we pass these assets on to the next generation in the most tax efficient way.
Effective retirement planning can limit the amount of Inheritance Tax one may pay (Image: GETTY)
“If you wait to die and pass it over, then it’s all up to the laws and they will come and take 40 percent after your allowance.”
It’s important for Britons to understand the value of planning for retirement and thinking about other options to share their wealth.
Carefully planned lifetime gifting can be a useful tool to reduce Inheritance Tax (IHT) after retirement.
Mr Asuquo continued: “For me it’s really important to understand that, ‘Okay I’m building up my estate, and I’m building up this wealth whether I’ve got children or nieces or nephews, or friends.’
“But give it to someone you choose and make your choice rather than giving it back to Government just because you haven’t planned for it.”
No Inheritance Tax is paid on gifts between spouses and civil partners, provided they live in the UK.
Taxpayers can also give away wedding or civil ceremony gifts of up to £1,000 as part of the exemption.
Everyday gifts, such as birthday or Christmas presents, are also eligible to be part of the exemption.
However, taxpayers must be able to maintain a certain standard of living after making the gift.
Mr Asuquo concluded: “For me it’s about taking that advice, seeking the advice, and making sure that the hard work you have put in over the years to build this up … is not given away to the government.”