Inheritance Tax: Unlocking Zero Percent on £1 Million Assets
In a recent interview with GB News, estate planning expert Steve Bish shared a silver lining amidst the 'terrible Budget' news. He revealed a strategy that allows individuals to pay zero percent inheritance tax on assets worth up to £1 million, a significant relief for many families.
Maximising Allowances:
Mr. Bish, the founder of Steve Bish Estate Planning, advises families to take full advantage of the current tax allowances. He highlights that children can now claim up to £650,000 tax-free from both parents, a substantial increase from previous years. This is a crucial aspect that many might overlook, especially when navigating the complex world of inheritance tax.
The Power of Planning:
The expert emphasizes that married couples and civil partners have always been exempt from inheritance tax when passing on their estate to the surviving partner. However, it's the next generation that often bears the burden. By utilizing the available allowances and understanding the rules, families can significantly reduce the tax liability for their children.
Navigating the Complexities:
But here's where it gets technical... Mr. Bish explains that direct descendants, including children and grandchildren, can claim an additional £175,000 inheritance tax-free per property resident. This means that with proper planning and the right forms, a couple's children can inherit up to £1 million without paying any inheritance tax. However, with skyrocketing house prices, many estates quickly surpass this threshold.
Gifting Allowance and Beyond:
The award-winning advisor suggests maximizing the 'annual exemption' to limit inheritance tax liability. Individuals can give away £3,000 worth of gifts each tax year without affecting their estate's value. Additionally, there's the 'normal expenditure out of income exemption,' allowing people to give away money or possessions tax-free, provided it doesn't impact their standard of living.
For larger estates, Mr. Bish recommends considering charitable donations. Donating 10 percent to charity reduces the inheritance tax rate from 40 percent to 36 percent. He also suggests exploring options like business property relief bonds and loan trusts with the help of a qualified financial planner.
A Personal Mission:
Mr. Bish's passion for estate planning stems from a personal tragedy. Inspired by the death of his friend Carl, who passed away without a will, he has penned a comprehensive guide, 'Where There's A Will, There's A Way.' This book aims to help individuals, especially parents, homeowners, and business owners, navigate the complexities of estate planning, probate, and inheritance tax. It's a practical resource to ensure families are prepared and protected.
Controversy in Planning:
Estate planning can be a sensitive and controversial topic. Some argue that inheritance tax is a necessary evil to prevent wealth accumulation, while others view it as an unfair burden on families. What's your take on this? Is it a fair tax, or does it penalize those who have worked hard to build their wealth? Share your thoughts in the comments below, and let's explore the complexities of this often-overlooked aspect of financial planning.
