Martin Lewis, the well-known consumer finance expert, has recently shared some valuable information regarding Inheritance Tax. In a recent episode of his BBC podcast, he discussed various aspects of personal finance, including wills, Power of Attorney, and Inheritance Tax. According to Martin, many Brits are unnecessarily anxious about this tax, which is only applicable if your estate exceeds £325,000. He reassured his followers that the majority of people in the UK do not need to worry about it, as only a small percentage of estates actually end up paying it.
To avoid paying Inheritance Tax, Martin suggested some smart strategies. One key tip is to be aware of the tax-free benefits of leaving assets to your spouse. Anything you leave to your legal spouse or civil partner is exempt from Inheritance Tax. However, this rule does not apply to cohabiting couples or common law partners. Additionally, if you pass on your main home to your children, the standard Inheritance Tax threshold of £325,000 can be increased by an additional £175,000, bringing it up to £500,000. This means that if the total value of your assets, including your home, is below £500,000, there will be no tax to pay.
Martin also highlighted the importance of understanding that any unused allowance can be transferred to your spouse. This means that by utilizing both your and your spouse’s allowances effectively, you could potentially leave up to £1 million, including a house, with no Inheritance Tax implications.
In conclusion, it is essential to be informed about Inheritance Tax and the various ways to minimize or even eliminate it legally. By following expert advice and understanding the rules and thresholds, you can ensure that your loved ones receive the maximum benefits from your estate without unnecessary tax burdens. Remember, Inheritance Tax may not be as daunting as it seems, especially if you plan ahead and take advantage of the available exemptions and allowances.
