Inheritance Tax can be complex and the rules do change regularly, so the best way to ensure that you mitigate the amount of tax payable on your estate, is to seek advice as part of your estate planning process.
Currently Inheritance Tax is payable on death at the rate of 40% on the value of your net assets over £325,000.The first £325,000 is called the Nil Rate Band because although it is taxable to Inheritance Tax, it is taxed at 0%.
If someone is in a marriage or civil partnership, they can leave everything free of IHT to their partner, and when the second partner dies, the two allowances can be added together and the combined value up to £625,000 will not be taxable. This is known as the Transferable Nil Rate Band. If you are married, the best way to pay less Inheritance Tax (or even none at all) is by making IHT efficient Wills and we can help you do this.
There is also an extra £175,000 allowance when the main home passes to a direct descendant, known as the Residence Nil Rate Bands. Whilst going through the estate planning process we will talk you through all of the Bands and also discuss any relevant IHT exemptions with you, including, Spousal Exemption, Charity Exemption, Business Property Relief and Agricultural Relief.
Why is Inheritance Tax Planning Important?
Research suggests that 70% of all UK household wealth is currently held by the over 50’s, otherwise known as the ‘Baby Boomer’ generation. This means that over the next 30 years we will see the largest ever transfer of wealth, anticipated to be approximately £5.5tn passed down in inheritance.
How to make use of IHT exempt gift allowances
Internet shopping may have boomed during the pandemic, but many people have spent less than usual while forced to stay home during the periods of lockdown. For those with spare money, they have an opportunity to make the most of inheritance tax reliefs on gifts to family and friends if they act swiftly.
The ‘cost of dying’ is now racing ahead of the rate of inflation
Recent research has revealed that the cost of dying is now the fastest rising fixed cost in the UK, ahead of costs of living including rent, utilities and food.
What does the Inheritance Tax Change mean to you?
Last week, during the Budget, the Chancellor formally announced a key change to Inheritance Tax (“IHT”) that would take affect from 2017.