You have to be earning a certain amount of money to pay tax – but there are certain things that you can do that will help you keep this to a minimum. Checking that your tax code is correct and ensuring that you are getting all the allowances that are due to you would come first. Like the banks, it is not unknown for the Inland Revenue to make mistakes! Completion of your tax return form will also help you to be up to date with this important item and may sometimes even result in a tax rebate! Self-employed people and employees are in different situations and will need different advice on tax matters.
Most people think that this will never apply to them but in the circumstances, say, that you have a house that is worth £300,000 with a mortgage covered by a life policy, or if you are employed and have a ‘death in service’ benefit which could pay out £100,000 if you died while you were working - in that scenario there would be £30,000 of inheritance tax for you to pay on your death – a situation which could take you unawares. Some people might consider that it won’t affect them as they won’t be around to be bothered by it! But if we are talking about good stewardship that means that you would want to think about the situation for your heirs and organise your affairs as well as you can rather than doing nothing. A large tax bill after your death is not good stewardship and would result in there being less to pass on to those left behind.
It is well worth taking some qualified advice to see if your estate might be affected by inheritance tax. That is the essence of stewardship – thinking ahead. If you think that your estate might be liable to inheritance tax then you need to make a will - that is definitely a good thing to do.
This series of blogs is based on the annual Stewardship seminar from King's