Each person has a nil rate allowance of £325,000. If the value of your estate is below this allowance, there is no inheritance tax to pay. If it is above this allowance, the excess is taxed at 40%. In the case of a married couple or civil partnership, any unused nil rate band from the estate of the first to die can be transferred to the survivor. This means that the estate of the survivor could benefit from a tax free allowance of up to £650,000, provided the wills have been structured correctly.
Did you know that……..
You can give away the sum of £3,000 annually. If you do not give it away one year, it can be rolled forward to the next year.
In the event of their marriage or civil partnership, you can give each of your children up to £5,000, each grandchild up to £2,500 and any other relative or friend up to £1,000.
If you are receiving more income than you need to live on, you can make gifts out of that surplus income which could be exempt from IHT.
If you leave a legacy of at least 10% of your net estate to charity you may be able to pay a reduced rate of Inheritance Tax of 36%.
If you own a business, depending on its nature and how long it has been trading, it could qualify for 100% relief from inheritance tax.
If you give your home away and continue to live in it until you die without paying a commercial market rent, it may still be included in your estate for inheritance tax purposes.
How we can help:
Inheritance tax is a complex area but can be mitigated with careful estate planning. At Paul Robinsons, we can provide specialised advice to assist you in taking maximum advantage of the exemptions and reliefs available and guide you on satisfying the technical HMRC rules that apply.