With near-constant house price inflation in the UK, Inheritance Tax is no longer “a tax on the rich”. The threshold for Inheritance Tax (known as the “nil rate band”) is currently £325,000 for an individual estate, with a flat rate tax at 40% payable on the value of the estate that exceeds the threshold figure. This may be reduced to 36% if 10% or more of the estate is left to charity. Inheritance tax is paid by the executor of the estate out of the estate’s assets, usually by the end of the 6th month after death.
Transfers to your spouse or civil partner on death are not subject to inheritance tax, and any unused percentage of the nil rate band may be transferred to your spouse or civil partner to add to their nil rate band on their death. In practice this means that if you give everything to your spouse on death, they will have a nil rate band of £650,000.
Fortunately there are wide range of perfectly legal tax planning measures can be taken to reduce the potential for paying Inheritance Tax. These include the use of trusts to put assets outside of your estate while still retaining the benefits of their use. We can act as Trustees on your behalf or draft Trust documentation to place the Trusteeship with your nominated individuals.
At Backhouse Solicitors we are experts in inheritance tax planning and the use of trusts. Contact us today and book a free initial consultation to find out how to protect your assets from the tax man and make sure that they go to your loved ones instead.
Tel: 01245 893400
Visit: 17 Duke Street, Chelmsford, CM1 1JU
Or send us a message through the Contact Us page on this website.