“Inheritance Tax is paid by people who distrust their heirs more than they dislike the Inland Revenue!”
These words from a former Chancellor are now far from reality due to the Government’s clampdown on perceived ‘tax evasion’ in recent years, and their ongoing desire to restrict legal ‘tax avoidance’ measures.
The Facts about IHT:
- Every individual can leave £325,000 (£650,000 for a couple) – the ‘nil rate band’ (NRB) – free of inheritance Tax (IHT) to anyone
- There is no IHT on transfers between UK spouses – they can leave any amount to each other
- A UK spouse can leave their £325,000 NRB, plus a further £325,000 to a non-UK spouse
- There are IHT reliefs available of 50-100% on certain agricultural and business assets
- There are a range of ‘annual IHT exemptions’ for gifts made during your lifetime
- IHT is charged at 40% on anything above the tax-free allowances
A new ‘residence NRB’ is being introduced in stages from April 2017, which will add a further £175,000 to the existing NRB by 2020, giving certain home owners a new tax-free allowance total of up to £500,000 – £1m for couples.
Crucially, to qualify for the ‘Residence NRB’, the property must be inherited by direct descendants – including natural & adopted children and grandchildren, but also – abnormally – including foster children & stepchildren – but not if left to other family members eg siblings, nieces or nephews.
The continuing property boom in the South East continues to draw more families into the IHT net. Recent research by the Institute of Fiscal Studies predicts 1 in 10 UK estates will be paying IHT by 2018 – a higher proportion of which will be in the South East.
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:
e: info@heir-tight-wills.co.uk
t: 0845 519 7585
m: 07902 433 775
