Inheritance Tax Planning


Everys Solicitors Inheritance Tax Planning Services

The current threshold at which inheritance tax (IHT) becomes payable on an estate is £325,000 for a single person. This is known as the nil-rate band.  When a spouse or civil partner dies, their unused allowance can be transferred to their surviving partner.  Provided they have not used up and exceeded their other allowances, a total of £650,000 may be passed on free of tax.  IHT is then charged at a rate of 40% on the remaining estate.

As of April 2017, however, new rules were introduced which gave an additional allowance of £100,000 per person on the existing nil-rate band, making a single person’s allowance £425,000.  This new ‘main residence’ nil-rate band allows an estate up to £850,000 (a couple’s £650,000 allowance plus their £100,000 each) to be passed on to direct descendants tax-free.  By the 2020/21 tax year, the threshold will increase so that direct descendants may inherit estates worth £1,000,000 without having to pay IHT.  For a single person, the maximum amount they may pass on without IHT being incurred is £500,000.

This new allowance is being introduced to help ordinary families who have seen their IHT liabilities increase due to the rise in property prices in recent years. The new allowance will not benefit everyone, however.  Estates above £2 million, but less than £2.7 million, will have their nil-rate band reduced by £1 for every £2 above the £2 million mark.  Estates worth more than £2.7 million will not be entitled to any nil-rate allowance.

These new rules are not straight-forward and advice should be sought to ensure that you take advantage of all the allowances available to you to prevent the taxman from taking what should rightfully be passed to your beneficiaries.

Contact one of our Private Client lawyers now to see how we can help you mitigate your liabilities through the use of various exemptions outside of the IHT threshold.

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Joan Pullin Expertise: Inheritance Tax Planning, Powers Of Attorney

Joan Pullin

Partner - Private Client

Tel: 01404 816981

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Sophie Davies Expertise: Inheritance Tax Planning

Sophie Davies

Senior Associate, Partner - Private Client

Tel: 01392 848949 (Exeter) / 01884 211033 (Tiverton)

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Nicola McIntyre Expertise: Court Of Protection, Inheritance Tax Planning, Personal & Trust Taxation, Planning for Later Life, Powers Of Attorney

Nicola McIntyre

Partner - Private Client

Tel: 01460 279274

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Hilary Askew Expertise: Court Of Protection, Inheritance Tax Planning, Personal & Trust Taxation, Planning for Later Life, Powers Of Attorney

Hilary Askew

Partner - Private Client

Tel: 01460 279261

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