Inheritance tax, in simple terms, is a tax payable on the value of your estate at the time of your death. In the current tax year, the first £325,000 of your estate is exempt from inheritance tax. This is called the “nil rate band”. If your estate is over the value of the nil rate band, the balance is taxable at 40%.
Married couples or civil partners can transfer their nil rate band to the survivor of them on death. This means a married couple or civil partners can claim 2 nil rate bands on the death of both of them. If you are unmarried or simply cohabit with your partner, your nil rate band is not transferrable.
There are a number of exemptions from inheritance tax, including leaving gifts to a spouse or to a charity. Certain types of assets can also be exempt from inheritance tax, such as business assets or agricultural property.
We are able to assist in preparing tax efficient wills to ensure that you are using all available exemptions and reliefs. A professionally drawn will can help you minimise the inheritance tax your estate may pay. We can also advise on post-death planning measures to reduce inheritance tax through the use of Deeds of Variation.
During the course of an administration of an estate, we will advise Executors as to their responsibilities to report to HMRC for inheritance tax purposes and explain what they need to pay and any reliefs they can claim.
The use of trusts can be a good way for some individuals to protect valuable assets against the risks of divorce, bankruptcy, re-marriage and care home fees.
In many families, the largest asset is the family property. We can help you consider whether it would be worthwhile to sever the tenancy on a joint property to provide more flexibility in estate planning to assist in protecting the assets from a local authority assessment for nursing care fees or in a re-marriage situation.