“Planning your will? Then you’ll need to take account of possible inheritance tax (IHT) liabilities: who will have to pay, how much, and when.
Inheritance tax is charged on the value of your estate when you die. Currently, individuals are charged no tax on the first £325,000, called the “nil rate band” (NRB). Above this, they’re taxed at 40%. The good news is that assets passing between spouses or civil partners, or to charity, are exempt.
However, in most cases, gifts made by you in the seven years before you die are added back to the value of your estate to work out the IHT bill. Your executors have to declare such gifts, so be sure to keep accurate records. You also need to be clear whether payments made during your lifetime, for example, to your children, are loans or outright gifts. Confusion can complicate the tax position, as well as potentially causing family disputes.
Before making wills, couples also need to consider the implications of the “transferable nil rate band”, introduced in 2007. This means if a person dies leaving their entire estate to their spouse or civil partner, then the tax-free allowance may be doubled on the death of that spouse or partner.
Other changes are in the pipeline with the introduction of a “residence rate band”, applicable to deaths after April 6th 2017. Individuals may qualify for an extra NRB of £175,000 if their estate includes a residence which is left to descendants.“
Inheritance tax planning is a complex area. For advice, call Robert on 01404 548050 or e-mail rxm@bevissandbeckingsale.co.uk
Visit the website at: www.bevissandbeckingsale.co.uk
Robert Mitchell has recently joined Beviss & Beckingsale’s private client team in Honiton. He specialises in estate planning, wills, trusts, and probate. In his spare time, he lets off steam by playing the organ!
