The net value of an Estate (properties, cash, savings, investments, payouts from life insurance & more) is worked out by taking the value at the time of death and then deducting any debts. This figure provides the net value of the estate.
With rising property prices and people also living longer, many will find themselves caught up in the inheritance tax trap.
- The current allowance knows as the Nil Rate Band is the amount that each individual can pass onto their beneficiaries free of Inheritance Tax
- This currently Nil Rate Band stands at £325,000 per person or £650,000 per couple
- Anything above this Nil Rate Band is taxed at 40%
- A new ‘Tax Free’ main residence band will be introduced from April 2017 and phased in over a few years
- April 2017 sees the Nil Rate Band increase by £100,000 to £425,000 per person
- It will continue to rise by £25,000 each year until it reaches £175,000 in 2020
- This additional banding is only valid on a main residence where the recipients of a home are direct descendants (classed as children, step-children and grandchildren
- The new allowance will therefore rise to £500,000 for single people and £1M for couples
- On any properties valued t £2M or more, homeowners will lose £1M of main residence allowance for every £2 of value above £2M. In this case a couple with a property valued at £2.35M will get no additional allowance
Planning For Inheritance Tax
It is possible to plan your Estate to legally reduce or even eliminate Inheritance Tax altogether. The key is to Plan as early as possible. Various strategies may be used including Gifting and utilising other statutory reliefs such as Business Property Relief on Business Assets.
The key is to understand what assets are likely to passed down to whom and then to use this strategy as part of an overall Estate Plan.
To see how this we can help with Inheritance Tax give us a Call on 0333 300 1882 or email us at firstname.lastname@example.org or complete the Contact Form and one of our Professional Consultants will be in contact to help you and answer any questions which you may have.