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Money Confidence - Inheritance Tax
On this episode of the Money Confidence podcast, Sarah and Georgia answer the cliff-hanger question from last week’s episode before getting onto the main topic of the episode: IHT, or Inheritance Tax.
KEY TAKEAWAYS
Inheritance Tax is a tax that is paid by your estate or your executors upon your death. It’s paid on your estate value above the tax-free threshold(s), which is the total amount of your assets minus your liabilities.
Everybody has an Inheritance Tax Nil Rate Band which is £325,000 for the current tax year, which is a tax-free threshold. You also have a Residence Nil Rate Tax Band, if your house is being left to direct descendants (children, step-children, adopted children, grandchildren). This is £175,000 per individual for the 2022/23 tax year.
The standard Inheritance Tax rate is 40%. It’s only charged on the part of your estate that’s above the tax-free threshold.
Pensions are usually outside your estate for Inheritance Tax purposes.
If you leave 10% of your net estate to charity, then the IHT rate reduces to 36%. If you leave it all to charity then there shouldn't' be any Inheritance Tax.
When you pass your assets onto your spouse, you inherit your spouse’s Nil Rate Band, so you will effectively have £650,000 Nil Rate Band and £350,000 Residence Nil Rate Band. You can’t more than double your original Nil Rate Band.
BEST MOMENTS
‘We haven’t done any preparation for this one, it’s all coming out of our heads…'
‘Inheritance Tax has to be paid within 6 months of death otherwise HMRC starts charging interest on it.’
'If you're married and pass your home on death to direct descendants, you have in total £1 million tax-free threshold between you before IHT is payable.'
‘The Nil Rate Band has been frozen for a few years and is remaining frozen until 2026.’
ABOUT THE HOSTS
Sarah is a Chartered Financial Adviser and Certified Financial Coach and Georgia is a Senior Paraplanner. Together, they have over 20 years experience in financial services and are on a mission to educate others about money in a fun and non-jargon way. They will help you master your finances and money mindset so that you feel more confident with money and the decisions you make around money. They talk all things money from investments, pensions and benefits to your mindset around money and steps you can take to improve your relationship with money. They aim to make it fun, educational and are with you every step of the way. Together, you've got this!
The information given in this podcast is for your entertainment and should not be construed as financial advice. No liability can be accepted for any individuals relying on this information without seeking specific advice and guidance. As always, take independent financial advice before making any investment decisions. Our discussions are based on tax and legislation in England which may change.
CONTACT METHOD
W: https://www.thegoodmoneycoach.com
IG: https://www.instagram.com/sarah_talks_money/
LI: https://www.linkedin.com/in/sarah-blyth-chartered-financial-planner-and-coach/
Hosted on Acast. See acast.com/privacy for more information.
View all episodes
By Sarah Blyth and Georgia LeggOn this episode of the Money Confidence podcast, Sarah and Georgia answer the cliff-hanger question from last week’s episode before getting onto the main topic of the episode: IHT, or Inheritance Tax.
KEY TAKEAWAYS
Inheritance Tax is a tax that is paid by your estate or your executors upon your death. It’s paid on your estate value above the tax-free threshold(s), which is the total amount of your assets minus your liabilities.
Everybody has an Inheritance Tax Nil Rate Band which is £325,000 for the current tax year, which is a tax-free threshold. You also have a Residence Nil Rate Tax Band, if your house is being left to direct descendants (children, step-children, adopted children, grandchildren). This is £175,000 per individual for the 2022/23 tax year.
The standard Inheritance Tax rate is 40%. It’s only charged on the part of your estate that’s above the tax-free threshold.
Pensions are usually outside your estate for Inheritance Tax purposes.
If you leave 10% of your net estate to charity, then the IHT rate reduces to 36%. If you leave it all to charity then there shouldn't' be any Inheritance Tax.
When you pass your assets onto your spouse, you inherit your spouse’s Nil Rate Band, so you will effectively have £650,000 Nil Rate Band and £350,000 Residence Nil Rate Band. You can’t more than double your original Nil Rate Band.
BEST MOMENTS
‘We haven’t done any preparation for this one, it’s all coming out of our heads…'
‘Inheritance Tax has to be paid within 6 months of death otherwise HMRC starts charging interest on it.’
'If you're married and pass your home on death to direct descendants, you have in total £1 million tax-free threshold between you before IHT is payable.'
‘The Nil Rate Band has been frozen for a few years and is remaining frozen until 2026.’
ABOUT THE HOSTS
Sarah is a Chartered Financial Adviser and Certified Financial Coach and Georgia is a Senior Paraplanner. Together, they have over 20 years experience in financial services and are on a mission to educate others about money in a fun and non-jargon way. They will help you master your finances and money mindset so that you feel more confident with money and the decisions you make around money. They talk all things money from investments, pensions and benefits to your mindset around money and steps you can take to improve your relationship with money. They aim to make it fun, educational and are with you every step of the way. Together, you've got this!
The information given in this podcast is for your entertainment and should not be construed as financial advice. No liability can be accepted for any individuals relying on this information without seeking specific advice and guidance. As always, take independent financial advice before making any investment decisions. Our discussions are based on tax and legislation in England which may change.
CONTACT METHOD
W: https://www.thegoodmoneycoach.com
IG: https://www.instagram.com/sarah_talks_money/
LI: https://www.linkedin.com/in/sarah-blyth-chartered-financial-planner-and-coach/
Hosted on Acast. See acast.com/privacy for more information.