Inheritance Tax can impact the assets passed on to loved ones, currently taxed at 40% above certain thresholds. However, strategies like legacy giving can reduce inheritance tax. Legacy giving involves allocating a portion of assets to a charitable cause in your Will, reducing IHT from 40% to 36% when donating at least 10% of your estate to charity. Find out more about your allowances and how legacy giving could become part of your estate plan.
Read MorePassing on your pension plan: A tax-efficient way to leave your assets to your loved ones
In the UK, your pension plan does not usually form part of your estate, meaning that it can be passed on to your family without being subject to inheritance tax. This makes it one of the most tax-efficient ways to leave your assets to your loved ones.
To pass on your pension plan, you will need to nominate who you want to inherit it by filling out a form with your pension provider. You can choose to nominate as many people or charities as you like and decide the portion each of them should receive.
Read MoreThe government's inheritance tax receipts have reached a record £7.1bn for 2022/23, and are forecast to increase to £8.4bn by 2027/28.
This increase is being driven by a number of factors, including the freeze on the inheritance tax free threshold, commonly referred to as the 'nil rate band', until at least 2027/28. This coincides with the surge in property prices during the pandemic period, further contributing to the overall increase in tax revenues.
If you are concerned that inheritance tax may be due on your estate, it is important to take proactive steps to minimize your potential tax burden. An independent financial adviser can help you to work out the total value of your estate, calculate how much tax your loved ones would potentially owe, and explore options for managing the potential tax bill.
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