You have now, hopefully, had a chance to read Part One and Part Two of Murray Beith Murray’s “Self-isolation Schedule” blog, with our first two suggested tasks to help you have a legally productive lockdown. Part Three in our series gives a very important task for you to take note of:
There are many ways you can reduce your inheritance tax (IHT) liability if you plan correctly. It is really never too early to start this planning, especially if you are concerned about the IHT liability upon your death.
By way of background, every individual has a tax free threshold (referred to as the ‘nil rate band’) which is currently £325,000. Broadly speaking, IHT will be payable at 40% of the value of your assets that exceed this threshold unless specific assets qualify for the available reliefs. For example, as of April 2017, there is an additional tax free allowance if you pass on a home to your descendants provided that all the relevant eligibility conditions are met
Transfers between spouses during lifetime and on death are exempt for IHT purposes (as are transfers to charities). On the second death, the combined estates are then subject to IHT.
However, spouses can also benefit from the transferable nil rate band, meaning that, in time, a surviving spouse could benefit from a tax free allowance of up to £1,000,000 on the second death.
Gifts are one of the most common ways to plan for IHT. Some options are as follows:-
Murray Beith Murray remain committed to providing you with a full legal service during these extraordinary circumstances. If you have any questions about the issues covered here, or if you would like to discuss estate planning with our solicitors, please call us on 0131 225 1200 or complete our contact form.