Financial Group, Canada Life, has predicted that over the next 10 years, the government’s receipts from Inheritance Tax (IHT) will almost double to £10 billion per annum. That is based upon current government IHT revenue trends and assumes a continuation of the current regulatory situation.
Nil Rate Band
Swindon-based Wills, probate and tax specialist, Megan Miller, of BLB Solicitors, says “the nil rate band for IHT, above which tax becomes payable, has remained frozen at £325,000 for a decade, whilst over the same period the average value of people’s assets has increased, largely as a result of continued buoyancy in the property market. This has meant that increasingly, people’s estates have become liable to IHT.
“However, in addition to the Nil Rate Band of £325,000 some people may be able to benefit from the Residence Nil Rate Band. This applies if you own your own home and it passes to your lineal descendants on your death. This allowance is currently worth £150,000 and will increase to £175,000 next tax year. The legislation surrounding the Residence Nil Rate Band is extremely complicated and it is important to seek legal advice to ensure that your assets and Will are structured so that your estate can benefit from it.”
Canada Life’s research has revealed that many estates are paying far more IHT than would have been necessary if some simple IHT planning had been undertaken.
“Within the existing Inheritance Tax rules, there is a lot that can potentially be done to reduce, or even avoid entirely, your loved ones’ tax liability when you pass away, as long as you plan ahead” says Megan. “Understandably, what happens after we die is not something we like to think about, but I believe that most of us would rather maximise the amount being passed on to those we care most about.”
Megan and our Lifetime Planning and Wills team can ensure that you fully understand:
- the current inheritance tax legislation;
- how it might impact upon you given the nature and extent of your assets; and
- provide you with the options available to you to reduce your estate’s liability on your death.