Our five minute read, Tax Tips for UK doctors and dentists will help you save tax, get you organised with your tax affairs and make you feel at ease that everything is taken care of.
This article does not constitute advice. Professional advice should be taken prior to acting on any part of it. The Financial Conduct Authority does not regulate tax advice.
Inheritance Tax is a big concern for many and if not planned for carefully it can eat up a large chunk of your estate.
You’ll be glad to know that is possible to reduce your Inheritance Tax from 40% to 36%, and you’ll be ‘doing good’ in the process.
Inheritance Tax rules
The Inheritance Tax threshold for 2017/18 is set at £325,000. This is level up to which you pay no Inheritance Tax on your estate. Further details on this can be found in our article, ‘Inheritance Tax, the facts’
In April 2017, the family home allowance was introduced. This currently stands at £100,000. Further details on be found in our article, ‘The new Main Residence allowance for IHT.’
This effectively gives you an Inheritance Tax allowance of £425,000 to use before tax is due on the remaining value of your estate.
Reducing Inheritance Tax
Typically Inheritance Tax is calculated at 40%, however by leaving 10% or more of your net* estate to a HMRC recognised charity or community amateur sports group, you can reduce this to 36%.
*After liabilities, reliefs and Inheritance Tax has been deducted.
Example:
Dr Lloyd passed away leaving an estate worth £600,000.
His Inheritance Tax allowance is £425,000 (£325,000 IHT allowance + £100,000 family home allowance)
This leaves £175,000 subject to Inheritance Tax.
He left a charity £50,000 donation.
This reduces the value of his estate subject to Inheritance Tax to £125,000.
As, he left more than 10% of his net estate to charity, Inheritance Tax due is calculated at £125,000 x 36%.
Dental & Medical Financial Services work hard to minimise your tax liability.