In the run up to the 2010 general election, the Conservatives pledged to raise the tax-free threshold on death to £1m per person if they got into power. In 2015 they had to find a way of delivering on their pledge – but all is not quite what it seems…
Currently:
- Every individual can leave £325,000 – the ‘nil rate band (NRB) – free of inheritance Tax (IHT) to anyone, a maximum of £650,000 for a couple (depending on the Will provisions)
- There is no IHT on transfers between UK spouses/civil partners, so they can leave any amount to each other
- A UK spouse can leave their £325,000 NRB, plus a further £325,000 to their foreign spouse
- There are IHT reliefs available of 50-100% on certain business assets and agricultural businesses
- There are a range of ‘annual exemptions’ available on gifts made during your lifetime
- IHT is charged on anything above the tax-free allowances at 40%
From April 2017:
- A new ‘family home allowance’ will be introduced, in stages – starting at £100k from April 2017, finally adding a further £175,000 to the £325,000 NRB by April 2020, so giving a new tax-free allowance of up to £500,000 for certain home owners – or £1m for couples
- Crucially, to qualify for the ‘family home allowance’ the property must be inherited by direct descendants – including natural & adopted children and grandchildren, but also, abnormally, stepchildren and foster children – but not for property left to siblings, nieces or nephews.
Inheritance Tax is a complex area, and Heir Tight Wills & Estate Planning Ltd are specialists in helping people put in place robust estate planning provisions to legally minimise the payment of IHT, through the use of Trusts and up to date, carefully considered, professionally drafted Wills.
For a complementary review of your Wills and estate planning provisions – to ensure they are fit for purpose, contact Rachael Rodgers of Heir Tight Wills:
e: info@heir-tight-wills.co.uk
t: 0845 519 7585
m: 07902 433 775
