Will there be any Inheritance Tax to pay?
Inheritance Tax (or ‘IHT’) is a tax charged by the government on the estate of any deceased person where the value of the assets in estate exceeds the relevant threshold, which is currently set at £325,000.
The value of the estate below £325,000 is often called the “nil rate band” allowance (or ‘NRB’).
In simple terms, IHT is normally charged at 40% and applies to the value of the assets in your estate above the NRB. Many of these assets may already have been subject to other tax payments (e.g. income tax or capital gains tax) during your lifetime.
Since October 2007, the Personal Representatives of the estate of a surviving spouse (i.e. a widow or widower) have been able to transfer any remaining NRB allowance which the first spouse to die did not use. This has the effect of increasing the amount of the estate which is protected from IHT.
This potentially allows a married couple or a couple in a civil partnership to pass on assets valued at up to £650,000 before any IHT becomes payable. At present, the option of transferring your significant other’s unused NRB allowance does not extend to other couples.
If the value of your estate is likely to be greater than the NRB allowance (or combined allowances if you’re married or in a civil partnership) then you should consider lifetime tax-planning options in order to reduce the IHT which your estate may otherwise have to pay.
At Hutton’s, we will discuss the options open to you and suggest ways in which you can ensure that your loved ones receive the maximum possible benefit when you pass away.
You will receive detailed advice on how best to plan ahead and an expertly drafted will, tailored to meet your specific needs.Back To News & Insights