Discussing inheritance and considering Inheritance Tax (IHT) planning can be uncomfortable for many. However, delaying planning until the last minute could be detrimental, as your estate may face a substantial tax bill if your total assets exceed the IHT threshold after your passing. Seeking the right advice early on can help minimise this tax burden. At JWP Solicitors, our team can assist you in utilising all available IHT reliefs and ensuring that allowances are optimised for your benefit.
What is IHT?
IHT is the tax which your estate may be liable for if your estate (everything you own) is above a certain amount. Everything above that threshold is usually taxed at a rate of 40%.
Everyone has a tax-free allowance and is entitled to pass £325,000 free of IHT. This is known as the ‘Nil Rate Band’.
Married couples and civil partners can share their allowance and transfer any unused allowance to their spouse/partner on death. This means that a married couple/civil partners can have a joint Nil Rate Band of £650,000.
Your JWP Inheritance Tax Solicitors can help you with
Keeping your IHT bill to a minimum
Understanding and planning for IHT
Reducing the size of your taxable estate
Making a Will
How much will it cost?
We offer a free first meeting to understand the details of your case and discuss potential routes forward. Before progressing with your case we will always provide a transparent view of costs. In many cases, we’re able to offer a fixed price upfront for our services.
Frequently Asked Questions
The named Executor in your Will is responsible for arranging the tax payment to HM Revenue & Customs. If you do not have a Will, it is the responsibility of your Administrator instead.
HM Revenue & Customs require IHT liability to be settled within 6 months from the date of death. The payment is usually made from funds within the estate or from the funds raised by selling assets within the estate.
In April 2017 an extra IHT allowance was introduced known at the ‘Residential Nil Rate Band’ (RNRB). This applies when the primary residence (the main home, usually the family home) is passed to direct/lineal descendants.
The RNRB allowance is now a maximum of £175,000 per person and like the NRB allowance, any unused allowance can be transferred to a surviving spouse/civil partner.
This means that married couples/civil partners have a potential tax-free allowance of £1 million.
There are various ways you can reduce the size of your taxable estate such as:
· Making lifetime gifts
· Using Trusts
· Charitable giving
· Making use of pensions
Before you consider any other form of IHT planning, it is essential that you have an up to date Will. Making a Will is one of the most important things that you can do to ensure that your estate goes to who you want it to, and trustworthy Executors are appointed.
If you already have a Will, you still might need to take action to ensure that you can benefit from the RNRB. Your Will should be reviewed every 5 years in any event.
