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Intergenerational wealth

Fact Sheet: Inheritance Tax

Without careful planning, your estate could be liable for an Inheritance Tax charge. Have you considered how best to structure you assets?

Introduction

Inheritance Tax is usually paid on an estate when somebody dies. It is also sometimes payable on trusts or gifts made during someone’s lifetime. Most estates do not have to pay Inheritance Tax because they are valued at less than the threshold (£325,000 in 2023/24). The tax is payable at 40% on the amount over this threshold. The standard Nil Rate Band will remain at this level until April 2028.

Married couples and registered civil partners can effectively increase the threshold on their combined estate when the second partner dies – to as much as £650,000 in 2023/24.

If your estate is worth more than the Inheritance Tax threshold there are some important Inheritance Tax exemptions that allow you to make gifts to others and not have to pay tax on them when you die.

The July Budget of 2015 announced the introduction of the Main Residence Nil Rate Band (RNRB) for Inheritance Tax purposes, to be set against the value of the family home. The RNRB gives each individual who has died after 6 April 2017 an additional allowance to be used against their home (or their interest in their home) provided they leave the property to their direct descendants. Any unused RNRB will be transferable between spouses and civil partners if it is unused on

The remainder of this document features information on:

  • How lifetime gifts are treated;
  • Exempt gifts;
  • Payments to help with living costs;
  • The seven-year rule – Potentially Exempt Transfers (PETs); and
  • The importance of keeping records.

 

For more information download the full document.

How can we help you?

Understanding the complexities of Inheritance Tax is a core component of estate planning. If you need assistance with how to reduce the tax liability due on your estate, we can help.

If you would like to discuss your estate and how tax efficient planning could reduce your Inheritance Tax liability, or if you wish to arrange an initial no cost, no obligation, consultation, then please fill out the contact form below. Alternatively, you can call 01603 706 820 or email info@lffp.co.uk.

Important information

The contents of this fact sheet do not constitute financial advice. The impact of taxation (and any tax relief) depends on individual circumstances. This has been prepared based on our current understanding of UK Law, Taxation and HMRC practice, all of which could be subject to change in future. 

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