Giving consideration to your financial affairs now means that you may be able to save significant amounts of tax which would be payable on your estate by your beneficiaries in the future.
The Inheritance Tax threshold, or ‘nil rate band’ is the amount up to which an estate will have no tax to pay. The nil rate band is currently £325,000. Since October 2007, married couples and registered civil partners have been able to effectively increase the threshold on their estate to as much as £650,000. This is done by the Executor or Personal Representative who transfers the first spouse or civil partner’s unused nil rate band to the second spouse or civil partner.
Additionally there are tax planning measures you can take during your lifetime to reduce the value of your estate, these include the following;
It will help your Executor or Personal Representative to deal with matters relating to inheritance tax when you die if you keep a record of any gifts you make and note on the record which exemption you are using.
In 2017 an additional nil rate band is due to come into effect for people leaving their property to a direct descendent (i.e. a child, step-child or grandchild). This will mean that if you own your own house, it will effectively have it’s own nil rate band to reduce inheritance tax which may be attributable, provided it is left to a descendent. It is proposed that the property nil rate band will be £100,000 in 2017, rising to £175,000 in 2020. For married couples, the additional nil rate band will apply on the second death, assuming they leave the property to each other on the first death.
To discuss your inheritance tax matters call Louise Salisbury or Zoe Bell on 01706 653322 for our Rochdale branch or 0161 763 1000 for our Bury branch. Alternatively email [email protected]