With a freeze in the Inheritance Tax threshold and ever-increasing house prices, more people than ever are falling into the dreaded “Death Tax Trap”. But some canny savers are finding subtle ways to keep their money from the taxman.
The Centre for Economics and Business Research recently stated that residential house prices could rise by a quarter before 2018. While a welcome relief for cash-strapped families, this news has been met with concern by many elderly homeowners wishing to leave an inheritance for loved ones.
The trouble stems from a recent 10 year freeze in the Inheritance Tax threshold, which won’t be raised again until 2019. The threshold represents the amount of money an estate can be worth before Inheritance Tax is levied upon it. Currently, that amount stands at £325,000 per person.
With some house prices heading towards £500,000 in the next few years, more people than ever will be paying the taxman after they die.
However, a number of allowances are made for people who wish to minimise their Inheritance Tax bill. From Annual Gift Allowances to Trust Funds, canny savers are increasingly transferring and spreading their wealth as they get older.
“It’s something we’re seeing more and more of,” says Paul Dodsworth of Estate Planning Solutions, one of the UK’s leading inheritance experts. “People are getting more savvy with spreading their wealth and asking the right questions about how they can protect it for loved ones”.
“By transferring some of their money to their families before they die or investing it carefully into Inheritance Tax free structures, a growing number of homeowners are arranging their finances in a way that keeps them below the InheritanceTax threshold. Inheritance Tax is the easiest tax to avoid but you do need to be proactive and actually do something.”
Paul added: “If you’re thinking of arranging your finances for the benefit of your family, it’s always worth getting proper advice”.
Estate Planning Solutions run a blog where they have included a couple of examples of how you can protect your wealth. Check it out by clicking this link.