With the growth in house prices in recent years, more families are now facing inheritance tax bills following the death of a family member.
If your estate is valued at more than £325,000 (£650,000 per couple), inheritance tax can be levied on your estate when you or your spouse, if relevant, dies.
£325,000 is known as the nil rate threshold and anything above this figure, excluding any assets that may be exempt, is subject to a 40% tax charge. However, in the case of a married couple, any unused nil rate allowance may be carried over from the first to die to the surviving spouse.
A new property nil rate band of £175,000, in addition to the standard nil rate band, is to be phased in gradually from 2017-2020. This will only apply to a main residence passing on to direct descendants. Estates with a net value over £2m will see the additional allowance reduced by £1 for every £2 over £2m.
Any inheritance tax due is payable to HMRC by the estate within 6 months of death otherwise interest starts to accrue. It is therefore important to ensure that your family/estate have accessible assets to meet any tax bills.
With some forward planning, it is possible to reduce or even eliminate inheritance tax liabilities. This could involve using various exemptions, gifts, trusts, investments or funding life assurance to provide for the eventual bill.
As impartial, independent financial advisers, we can advise on the best solution for your individual circumstances.
Please contact our Financial Services Department for a confidential, no-obligation consultation on 01473 408422.
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