25 July 2024
Families urged to plan ahead to reduce their inheritance tax bill
Latest figures from HMRC show that inheritance tax receipts have risen by 7.2% since last year. By taking advantage of available tax reliefs and planning carefully, families can make sure their loved ones pay the smallest tax bill possible and get the most out of what they inherit.
The Association of Lifetime Lawyers (of which we're members) represents a community of the most qualified legal professionals in the UK supporting vulnerable and older people with expert advice and support, and their message is that there are precautionary steps to take if you plan for family members to inherit part, or all of your estate upon your passing.
With more estates than ever liable for IHT, it’s crucial to plan ahead to avoid a large tax bill for your loved ones. If the value of your estate is below the current nil rate band allowance of £325,000, no inheritance tax (IHT) is owed, provided the allowance hasn't been reduced by relevant lifetime gifts.
For married couples or civil partners who leave their entire estate to each other, HMRC permits the full transfer of the nil rate band to the surviving partner, effectively doubling the allowance to £650,000. Even if only a part of the estate goes to the spouse, the unused portion of the nil rate band can still be transferred upon the death of the second spouse.
If your estate includes a business or related assets, at present, additional reliefs currently apply at rates of either 50% or 100%. Likewise, certain agricultural properties, such as land used for rearing animals or growing crops, can pass free of IHT, provided specific criteria are met.
Creating a will is essential to ensure your assets are distributed to your chosen beneficiaries. Without a valid will, your estate will be divided according to the intestacy rules, which may result in your family not receiving what you intended.
Given the recent change in government, we’d recommend keeping an eye out for any potential policy changes and speak with a Lifetime Lawyer to help minimise your tax bill.
Research from The Association of Lifetime Lawyers shows nearly half of UK adults (49%) do not have a will. If you'd like to speak to one of our expert solicitors about making or updating a will, get in touch today.
