Inheritance Tax Planning allows you to pass on more of your estate to your loved ones, rather than HM Revenue & Customs.
The law allows you to leave an estate worth up to £325,000 without having to pay any Inheritance Tax. This is called the 'Nil Rate Band'. The remainder of your estate will be taxed at 40%.
On 6 April 2017 the Government introduced the Residence Nil Rate Band (RNRB). This allows for an extra £100,000 to be available tax-free when a residence is passed on to direct descendants. The RNRB is due to increase year-on-year until April 2021.
Spouses and civil partners can transfer their Nil Rate Band allowance.
The transferable allowance is available for married people or civil partners who died on or after 9th October 2007, irrespective of when the first partner died.
Any assets passing to a surviving spouse or civil partner are exempt from Inheritance Tax but there must be a valid Will in place for this to be effective. Different rules will apply if you die without having a Will in place.
When considering whether any inheritance tax will be payable on your estate you should add up all of your assets. This includes property, savings, stocks and shares, premium bonds etc. Then deduct any liabilities such as a mortgage, credit cards or loans.
Remember to exclude anything that will not form part of your estate, for example property held jointly with someone else as joint tenants, and usually any life policies and pensions.
It is important to know that all gifts to a registered charity are tax free and there are also tax allowances for some gifts of agricultural or business interests.
Rowlington Tilley's will writing services will help you with Inheritance Tax planning to ensure that your estate pays as little tax as possible, leaving more for your loved ones.
If you want friendly, straightforward, professional advice about inheritance tax planning, the RNRB or writing your will, please get in touch.