The Family Budget and Taxes - Checking Your Inheritance and Finances

Inheritance and Taxes: What You Should Know

15:17 27 March 2013

Most people start thinking about taxes maybe a month or two ahead of April.  When should you think about taxes?

 

In order to properly get the most out of your investments, inheritances for loved ones, and benefits, you should probably start thinking about taxes years before something happens that could change the tax situation dramatically.

 

An example of this is the Inheritance Tax that can cause many partners to wonder how much they will actually be able to keep. You should talk to a financial planner years before retirement if you are leaving a large amount of inheritance.

 

In order for your loved ones to get the most out of a bad situation, you should know the IHT limits. If you don’t want heirs to pay any tax, then the limit is £325,000 for all nil rate bands.

 

You can transfer all or a part of your NIL rate band to your significant other, but the limit for couples is set for £650,000. Keep in mind what exceeds the amount is subject to Inheritance Tax.

 

In order to get the most out of your investments and to be prepared for tax season you should have all your ISA’s done by 5th April. You can contribute up to £10,680 for the current tax year. Half of this amount, which is £5,340, can be in a Cash ISA. 

 

Junior ISA’s were created for your children who are under the age of 18 and they can be in any combination of stocks & shares and the Cash ISA. The current limit that you are allowed to put into a Junior ISA is £3,600. 

 

Gifts to Family

 

• You should have completed as many gifts up to the maximum limit of £3,000.  This gift can only be done again the next year for a maximum cumulative total of £6,000.

 

Taxes and the Family

 

• Divide up the income producing assets equally between the two taxpayers so that each of you has the lowest band rate on your income taxes, which means less Inheritance Tax.