Plan ahead to reduce inheritance tax bills
Emma Garfitt, partner in our wills and estates team is encouraging people to plan ahead to help reduce their inheritance tax (IHT) 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.
Emma says: “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.”
Emma is a member of The Association of Lifetime Lawyers, a community of the most qualified legal professionals in the UK supporting vulnerable and older people with expert advice and support.
She says there are precautionary steps to take if you plan for family members to inherit part, or all of your estate upon your passing: “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 business-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.
Emma continues: “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.”
Research from The Association of Lifetime Lawyers shows nearly half of UK adults (49%) do not have a will. It’s important to consult a legal professional to help you draft a will.
Emma concludes: “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.”
About The Association of Lifetime Lawyers:
The Association of Lifetime Lawyers (formerly known as Solicitors for the Elderly or SFE) is a membership body for legal professionals – our members are the most qualified lawyers in the country when it comes to supporting older people and those in vulnerable circumstances who may need extra help and support.
Lifetime Lawyers receive expert training and best practice guidance to offer the very best advice.
