There is a widespread lack of understanding regarding inheritance tax. Put simply, the first £325,000 falls under the ‘nil rate’ band, so there would be nothing to pay. (as long as the nil rate band has not already been used in the deceased’s lifetime).
Thereafter, the Treasury takes 40% of the estate. Since 2007 it has been possible to transfer any unused percentage of the Nil Rate Band from a deceased spouse or civil partner. For deaths occurring after 6 April 2017 an estate may also qualify for an additional allowance known as a Residence Nil Rate Band. There are certain conditions which must be met in order to qualify for this relief. The position has been changed recently so that, in many cases, for example, a surviving spouse will automatically be able to utilise the unused portion of the deceased spouse’s nil rate band.
How do I mitigate my Inheritance Tax liability?
• Make a will
• Arrange a will trust if suitable for your circumstances
• Reduce the estate whilst alive
• Use Insurance policies
• Make lifetime gifts
• Without a will, there may be uncertainty if any of the above applies to you.
Planning to avoid Inheritance Tax can be a complicated procedure requiring expert legal help. It need not be payable in many situations. For an informal discussion about your affairs contact our Wills & Probate team today