Wills & Probate
For Your Family’s Future
Inheritance Tax Planning
Without tax planning, many people will pass away with a substantial part of their estate being liable to inheritance tax.
Inheritance tax is currently payable on all estates over the value of £325,000 (possibly upto £650,000.00 on the death of a surviving spouse or civil partner) at a rate of 40%. In some circumstances, the tax liability payable from the estate (particularly on property) may leave the beneficiaries with no other alternative than to sell the assets. It takes away their choice on whether or not they wish to retain the property.
Your estate includes the value of your property, any savings in banks or building societies, shares and investments, life policies and personal belongings.
You may think that the £325,000.00 threshold is a relatively high figure however, the sudden increase in property prices a few years ago brought a lot of people within this bracket.
Although assets passing between husband and wife/registered civil partners are tax exempt, this will only postpone tax liability, as tax will be payable on the estate of the surviving spouse/partner. It is now, however, possible to transfer the unused inheritance tax nil rate band to the estate of the surviving spouse which could give up to £650,000.00 of the surviving spouse’s estate inheritance tax free. This will necessitate additional tax forms to be completed to apply for the transfer.
Residence Nil Rate Band (RNRB)
The new inheritance tax Residence Nil Rate Band (RNRB) came into effect in April 2017. It is in addition to an individual’s own nil rate band of £325,000, and depends on the main residence being passed down to “lineal” descendants such as children, grandchildren but can also include foster children, stepchildren and some other categories.
The current RNRB is £100,000.00 per person rising slightly each year and will reach £175,000 by April 2021. Ultimately by 2021, in conjunction with their usual nil rate band, this will give a couple a possible allowance of £1 million between them. For advice on the Residence Nil rate band and whether this may apply to you please contact our team to arrange a consultation.
Contact our Wills & Probate team for advice or to make an appointment, and ensure that you pay as little inheritance tax as possible. Call 01744 742360, or click here to email firstname.lastname@example.org >
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