Email Enquiry   Callback Request

Inheritance Tax Planning

Inheritance Tax applies to anyone with a net worth of over £312,000 (the current nil rate band). On death the tax is payable on the value of all assets over this nil rate band at 40%. Transfers between spouses are exempt, so anything left in a will to a husband or wife will not be taxable. In this situation the problem comes on the second death where all the assets left by the second spouse to die will be taxable after the deduction of the nil-rate band, any reliefs available on agricultural or business assets and any debts payable by their estate. This can mean that the beneficiaries on the second death, often the children, are left with a sizeable Inheritance Tax bill.

Fortunately, provided the parties are married, the unused nil rate band from the first death (or a proportion of it) can be transferred to the survivor. In practice therefore a married couple can get a double allowance, currently equivalent to £624,000.

There are other ways of achieving the object of passing assets on to others without benefiting the taxman. You can reduce the value of your estate by lifetime giving or by taking potential assets such as life insurance out of your estate, writing them in trust so that they go directly to your intended beneficiaries. We will be happy to discuss the options with you.

We trust that these notes will be of assistance to you but they must only be read in conjunction with specific legal advice as to your particular circumstances. They are not intended to be a full and precise exposition of the law. Do not hesitate to seek our further advice - not only on the subject of Wills and tax planning but also about care planning and Lasting Powers of Attorney.