Understanding Inheritance Tax Rules

Importance of individuals understanding what is and what is not exempt from inheritance tax highlighted.

Those that are dealing with an estate after a spouse has died or who are planning their own affairs must take note of the nil rate band (N.R.B.). Any amount of money that falls within the limit of the N.R.B. will not incur tax after death. Until at least the 5th of April 2021 people will deal with a N.R.B. of £325,000. Money that over the N.R.B. is taxed at a considerable rate of 40%.

What Will Incur Inheritance Tax?

The value of assets in an estate are valued as a whole, for most people the single largest asset they will pass on will be property. The N.R.B. has historically closely tracked the average house price in the U.K. through successive governments. Any value over this amount will be subject to inheritance tax unless it qualifies for one or more of a number of exemptions.

What Is Exempt From Inheritance Tax?

The first important exemption is when an estate is transferred to a spouse. As long as the spouse is a resident of the U.K. the rule is simple, if they live overseas it is not always as cut and dry.

If the person who has died did so as a result of action whilst in the Armed Forces their estate does not qualify for inheritance tax. This also applies when it can be proven that death was hastened due to their participation in Armed Forces activity.

Gifts can also qualify as inheritance tax exemptions. A gift to a child under the age of 18 and that is for the purpose of that child’s maintenance is exempt. Gifts to charities and even political parties that hold at least one seat in the House of Commons also qualify.

Debbie Day.

Mobile : 07704 311021 Felixstowe Office : 01394 775711

deb.day@hoskinfinancial.co.uk www.debbiedayifa.co.uk

THIS BLOG PROVIDES INFORMATION, IT IS NOT ADVICE. ANY OPINIONS ARE GIVEN IN GOOD FAITH AND MAY BE SUBJECT TO CHANGE WITHOUT NOTICE. OPINIONS AND INFORMATION INCLUDED WITHIN THIS EMAIL DO NOT CONSTITUTE ADVICE. (IF YOU REQUIRE PERSONAL ADVICE BASED ON YOUR CIRCUMSTANCES, PLEASE CONTACT US AT HOSKIN FINANCIAL

A Million Plus Pensioners Totally Reliant On Government Support

Private funds failing to cover pensioner’s expenses.

People are being warned to plan ahead and seek Financial Advice Suffolk as to how to make the most out of any savings they accrue during their working life. Group communications director at Just, a specialist retirement services provider Stephen Lowe explains that “the State will never provide a retirement income that allows for many comforts, so for those who do have some savings, good guidance about what to do with those savings is vital.”

Of those already in retirement, roughly 1.1 million pensioners live alone and are totally reliant on income from the state. This number shows a trend of increasing state reliance, up 26% for individuals between the ends of 2011 and 2016. April last year saw a 12 month increase of 15%, adding to fears the problem is continuing to accelerate.

When including couples, 330,000 more people depend on some form of state benefit completely. This figure includes those that are in receipt of disability benefits as well as state pensions and income related benefits.

How Much Does The State Provide For Pensioners?

For single pensioners, the average amount of money they receive is just £188 per week in the year 2015 to 2016. Being aware of how much the government deems sufficient to live on in retirement should encourage those that have not yet reached retirement age to do the best they can to build up personal savings and private pensions.

Pre-retirees should also be aware that this amount is not guaranteed as political decisions may change the state pension landscape. Currently, taxpayers are paying £850 million a week to cover the 4.6 million single pensioners currently in the U.K..

All of those not yet in retirement could benefit from saving as much as possible. As Mr Lowe states, the amount given to state pension recipients is only designed to cover basic needs, anything else is up to the individual to provide for themselves whilst they still can.

Paul Hoskin MD at Hoskin Financial

THIS BLOG PROVIDES INFORMATION, IT IS NOT ADVICE. ANY OPINIONS ARE GIVEN IN GOOD FAITH AND MAY BE SUBJECT TO CHANGE WITHOUT NOTICE. OPINIONS AND INFORMATION INCLUDED WITHIN THIS EMAIL DO NOT CONSTITUTE ADVICE. (IF YOU REQUIRE PERSONAL ADVICE BASED ON YOUR CIRCUMSTANCES, PLEASE CONTACT US AT HOSKIN FINANCIAL

Citizens Advice Highlight Lack Of Pension Provision For Multiple Job Holders

More than 100,000 British workers are not earning enough to qualify for auto enrolment pensions.

Workers in the U.K. qualify for auto enrolment pensions once they achieve earnings of £10,000 from a single job. It is the fact that multiple sources are needed to reach this trigger point that prevents many from benefiting from the law.

Citizens Advice found that almost 106,000 people fell into the category of earning too little from a single employer. The charity came to this conclusion after analysing figures from the Office of National Statistics’ Labour Force Survey.

Women Disproportionately Affected

72,000 of those affected are women. The reasons given for this include the idea that women disproportionately have to find jobs that fit around family commitments. Chief executive at Citizens Advice, Gillian Guy states that “many people – particularly women – work several part-time jobs, which helps them manage commitments like childcare or study.”

Auto enrolment into pension schemes began in 2012 in order to prevent a looming crisis of private under funding of old age expenses and on the whole are viewed as successful. Around 90% of those eligible have decided not to opt out meaning by 2018, 10 million people are projected to be saving in to a pension fund directly because of the measure.

Multiple job holders and the self-employed have not been provided for as of yet. The Government is aware of this and have announced a review of the scheme which will look into any perceived shortcomings.

Ms Guy calls on the Government to “seize the opportunity of this year’s auto-enrolment review and use it to pave the way for helping more people get on track with pension savings.”

Citizens Advice have also recently surveyed managers finding that of the over 1,100 questioned, only 18% cited auto enrolment responsibilities as a key concern going forward. Far more, 44% are most worried about hiring the right staff and 36% about retaining them.

Paul Hoskin MD at Hoskin Financial

THIS BLOG PROVIDES INFORMATION, IT IS NOT ADVICE. ANY OPINIONS ARE GIVEN IN GOOD FAITH AND MAY BE SUBJECT TO CHANGE WITHOUT NOTICE. OPINIONS AND INFORMATION INCLUDED WITHIN THIS EMAIL DO NOT CONSTITUTE ADVICE. (IF YOU REQUIRE PERSONAL ADVICE BASED ON YOUR CIRCUMSTANCES, PLEASE CONTACT US AT HOSKIN FINANCIAL