The Budget 2013 – How it could affect your inheritance tax

The Budget 2013 – How it could affect your inheritance tax

The Cheapest Life Insurance wants to offer some information about Inheritance tax.  This is a considerable aspect of life insurance in some ways, with those who have policies who don’t want any payouts being eaten up as part of an estate.

The Budget 2013, seems to have completely ignored home owners when it comes to tax reliefs.  Therefore, all the hard-work and money saving you do to invest in your family and its future upon your passing is perhaps a bit like taking two steps forward and one step back each time.

In short, George Osbourne has kept the Inheritance Tax at a limit of £325k, which will be the case until 2018.  Therefore, this means that when you die, if your estate is subject to tax, anything above this threshold will be taxed at 40%. This is all very well of course, but have you ever thought about how your family would actually pay for this tax bill?

If you’re sat there thinking – well what I have is no where near that amount, so should it even matter to me?

Well, let’s look at how you could accrue that £325k…

  • Properties – You might have your main home, but what about any other properties or even holiday homes?
  • Bank accounts – you could have more than one account
  • Any assets related to a business
  • Investments – perhaps you have forgotten about one or two
  • Your pension
  • Jewellery
  • Your car or even cars
  • Life Insurance policies that are NOT written into Trust
  • Foreign Assets

Any liabilities that are outstanding are held by the estate and therefore deducted from the value of your possessions before the inheritance tax is applied.  However, the Budget has taken actions to stop some tax loopholes that existed before. This is in an effort to stop abuse of deductions as seen in the past.

Preparing yourself

There are lots of ways you can help yourself when it comes to inheritance tax. Obviously early planning is always useful – for example planning gift money for your family should something happen to you.  Another approach is to take out life insurance, to cover any inheritance tax bill that your family might be faced with.  Any option should be based on your circumstances and of course it’s always essential to speak to an independent financial adviser before doing anything, but at this stage, it’s definitely food for thought.

Getting a life insurance policy written into trust

You can take out a life insurance policy and get it put into trust so that your family or partner are protected should something happen to you.  This will mean your family receives a sum of money to cover the inheritance tax bill, which can certainly save a lot of stress.

It is important to take into account that an inheritance tax bill can’t be paid from the deceased estate. Therefore, having a life insurance policy in trust will really help your family with the bill, as it will give them access to funds.

Obviously there are a lot of aspects to Inheritance tax but we’ve tried to offer just a few bits of information to get you started.

Should you know what you want and you are looking for life insurance to write into trust, fill out our quick quote form today and one of our qualified consultants will call you back with a range of quotes.

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