Our Inheritance Tax Solicitors can help you maximise the amount you leave to your loved ones.
Inheritance Tax is a tax paid on your property and belongings (estate) when you die. It has to be paid before probate is granted and the inheritance is released. With tax currently charged at 40% on estates worth more than £325,000, Inheritance Tax can take a sizeable slice out of the wealth you wish to leave your family.
Your estate, for Inheritance Tax purposes includes:
Your home and any other properties you own
- Your possessions
- Bank and Building Society accounts
- Insurance policies not paid out under trust arrangements
How We Can Help You Reduce Inheritance Tax On Your Estate
There are many ways we can help minimise the tax payable on your death. For example, simply having a life insurance policy set up to pay to a Trust, rather than to your estate, can make a huge difference. Similarly, leaving a portion of your estate to a UK charity in your Will can help reduce the tax burden.
Our Inheritance Tax Solicitors provide expert advice on the following:
Making gifts (if you make a gift and die within 7 years of making it, there may be Inheritance Tax to pay. These gifts are called “potentially exempt transfers”)
- Structuring Wills to minimise Inheritance Tax
- Business succession planning. One of the most valuable Inheritance Tax reliefs is Business Property Relief, which allows qualifying business assets to be passed to the next generation free of Inheritance Tax. Careful planning can ensure that this relief is preserved, as, in certain circumstances, it could be lost.
- Restructuring your inheritance plans following a marriage, or a divorce
- Structuring your affairs to make the most of reliefs
- Investments with favourable Inheritance Tax treatment
- Deeds of variation (where a will, or part of it, can be varied after death in order to save Inheritance Tax)
Inheritance Tax Changes 2017
From 6th April 2017, changes are being made to Inheritance Tax which may benefit people who want to pass on their estate including their home to children or grandchildren.
In addition to the existing tax-free threshold of £325,000 – also known as the Nil-Rate Band - the government is introducing a Residential Nil-Rate Band (RNBR) for estates worth up to £2 million. The RNBR will only apply when a home is being passed on to children or grandchildren and is being phased in yearly starting in the 2017/18 tax year:
- 2017-18: £100,000
- 2018-19: £125,000
- 2019-20: £150,000
- 2020-2021: £175,000
Currently, married couples and civil partners can transfer their Nil-Rate Band to effectively double their tax-free allowance to £650,000. The RNRB is also transferrable so it will effectively be worth £350,000 by April 2020. This means that couples will be able to pass on a total of £1 million in assets without paying any Inheritance Tax by 2020.
There are substantial tax savings on offer from April which will increase significantly over the next three years:
- Married couples, civil partners or widow(er)s could save £80,000* from April 2017, increasing to £140,000* from April 2020
- A divorced or single person could save £40,000* from April 2017, increasing to £70,000* from April 2020
Your Will may need to be updated to make the most of this new tax-free allowance. The relief is not an automatic entitlement and does depend upon navigating some hurdles to ensure that the full relief from Inheritance Tax can be claimed. Our lawyers can advise on how the inheritance tax changes will affect your estate and make any necessary amendments to your Will. Our Will Writing Solicitors can also help you take advantage of the new Residential Nil-Rate Band if you don’t have a Will already.
Explore what these changes might mean to you using our interactive tool
* Benefit depends upon the value of the home and of the estate as a whole
Call Us On 0370 1500 100 To Find Out More
Get in touch with one of our tax specialists, for a no obligation discussion about the impact of Inheritance Tax on the legacy you wish to leave. Call us on 0370 1500 100, or have us call you back. You can also send us an email and we’ll come back to you.