Inheritance tax 2025 remains a significant concern for many families in the UK. It is a tax on the estate (property, money, and possessions) of someone who has passed away. As property values continue to rise, more estates are being caught in the inheritance tax net. Knowing the rules and exemptions can help families plan better and avoid unexpected liabilities.
What is Inheritance Tax and When is it Due?
Inheritance tax 2025 is typically charged at 40% on estates above the current threshold of £325,000. However, with smart planning, many estates can reduce or avoid this tax. If the estate is left to a spouse, civil partner, or a charity, no tax is due. Additionally, there’s a main residence nil-rate band of up to £175,000 if the property is passed to direct descendants.
Importance of Planning Early
Effective estate planning is key to managing inheritance tax 2025. Setting up a will ensures your assets are distributed according to your wishes and may help reduce tax exposure. Consider lifetime gifts, which are potentially exempt transfers (PETs), provided you live for seven years after giving them. Using trusts can also be an efficient way to manage your estate, though they come with their own tax rules.
What You Should Declare
An executor must value the estate and report it to HMRC, including all property, possessions, savings, pensions, and certain gifts made within seven years of death. Under-declaring can lead to penalties. It’s essential to be accurate and transparent to avoid issues during the probate process.
Recent Changes and 2025 Outlook
There are no significant changes to the inheritance tax 2025 threshold at the moment. The government has frozen the nil-rate band until at least April 2028. This means more estates could become liable due to rising asset values. It’s more important than ever to keep your estate plan updated and seek advice to stay ahead of any rule changes.
Seeking Professional Help
Navigating the complexities of inheritance tax 2025 can be overwhelming, especially during emotionally challenging times. At Care Accountancy, we help individuals and families with estate administration, inheritance tax planning, and will preparation. Our advisors work with you to ensure your loved ones are protected and your estate is passed on as efficiently as possible.
Conclusion: Take Control of Inheritance Tax 2025
Inheritance tax 2025 doesn’t have to be a burden. With careful planning, clear communication, and the right guidance, you can safeguard your legacy for future generations. If you haven’t reviewed your estate plans recently, now is the time to do it.
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