Inheritance Tax (IHT) at a rate of 40% may be charged on the estate when someone dies, unless it has been left to a spouse or civil partner. When planning to mitigate the impact of IHT, there are a number of key points and tax reliefs to bear in mind.
We’re sure you would prefer your loved ones to benefit from your legacy rather than the tax man. If appropriate and timely action is taken, there is often scope to significantly reduce a taxpayer’s Inheritance Tax liability.
The nil rate band means that the first £325,000 of your estate is exempt from IHT. A new nil rate band called the ‘residence nil rate band’ (RNRB) is being phased in from 6 April 2017. Its introduction makes it easier for the family home to be passed to direct descendants on death.
For deaths in 2017/18 RNRB is £100,000. This will rise to £125,000 in 2018/19, £150,000 in 2019/20 and £175,000 in 2020/21. Thereafter, the threshold will rise in line with the Consumer Price Index.
A number of conditions must be met in order to obtain the RNRB, which may involve redrafting an existing will.
If you do not currently have a will, our Barrister Intermediary, Sharon Rigden, can help you to prepare one. Find out more about our range of Legal Services including wills, estate planning and probate, here.
Inheritance Tax online
Executors in England and Wales who wish to notify HMRC of the value of an estate can now do so using a new online form. The digital form can be used instead of completing the paper IHT205 form. You can find a helpful checklist and complete the form here.
The service is for use:
- by personal representatives of the deceased applying for a grant of representation, such as probate
- in England and Wales
- in circumstances where no IHT is likely to be payable.
How we can help
For legal advice on wills, estate planning and probate, please use the online form at www.rfmlegal.co.uk or call 01772 431233 to speak to our Barrister Intermediary.
For information of users: This material is published for the information of clients. It provides only an overview of the regulations in force at the date of publication, and no action should be taken without consulting the detailed legislation or seeking professional advice. Therefore no responsibility for loss occasioned by any person acting or refraining from action as a result of the material can be accepted by the authors or the firm.