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Home    Inheritance Tax
  • Capital Gains Tax
  • Income Tax
  • Introduction to Taxation

Inheritance Tax

TAX TREATMENT VARIES ACCORDING TO INDIVIDUAL CIRCUMSTANCES AND IS SUBJECT TO CHANGE.

THE FINANCIAL CONDUCT AUTHORITY DOES NOT REGULATE ADVICE ON ESTATE PLANNING AND TAX PLANNING.

Inheritance Tax (IHT)

The government levies tax on the value of a person’s estate, if their estate is worth more than the Nil Rate Band. The IHT ‘Nil Rate Band’ (NRB) is currently £325,000 (2020/2021) and many people are still getting caught in the trap of property inheritance tax as the threshold has not kept pace with the inflation of property prices, and so is affecting more and more people.

There is also an additional ‘main residence’ allowance (‘Property Nil Rate Band’ (PNRB)) which applies if a person’s home is given to their children (including adopted, foster or stepchildren) or grandchildren. This is set at £175,000 (2020/2021) and is added to the IHT threshold providing a total allowance of £500,000 (2020/2021).

When a relative dies and leaves an estate worth more than £325,000 (2020/2021) or £500,000 (2020/2021) if the ‘main residence’ allowance applies, families are required to pay tax on the amount in excess of the NRB (and PNRB if applicable) within six months. After that, they are charged interest at a rate of 2.6% (2020/2021).

However, there are ways to lessen the burden of property IHT.

When you die, it is likely that you would wish to leave as much as possible for your loved ones. Unfortunately this is often not as simple as you might believe. HM Revenue and Customs (HMRC) will apply 40% tax to the value of your estate over and above that of the NRB (and PNRB) that applies at the time of death.

No IHT is applicable on ‘inter-spousal transfers’ (money/property/assets that is bequeathed by one spouse (or civil partner) to the other.

Your estate could include more than you originally realise. It is often easy to dismiss IHT as something that may not affect you as your property may not be over, or much over, the IHT threshold. However with all your other assets, such as investments, life cover, bank accounts, as well as physical property such as cars, furniture and family heirlooms, many estates are considerably over the threshold without the individuals being aware of it.

For assets passed between spouses and civil partners, the nil rate band allowance will pass along with the assets. This gives a couple available allowances (nil rate bands) of up to £650,000 (2020/2021), which increases to £1,000,000 (2020/2021) with the addition of the ‘main residence’ allowance detailed above.

For further information about the 2020 Budget changes please click here.

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TAX TREATMENT VARIES ACCORDING TO INDIVIDUAL CIRCUMSTANCES AND IS SUBJECT TO CHANGE.

THE FINANCIAL CONDUCT AUTHORITY DOES NOT REGULATE ADVICE ON ESTATE PLANNING AND TAX PLANNING.

Inheritance Tax (IHT)

The government levies tax on the value of a person’s estate, if their estate is worth more than the Nil Rate Band. The IHT ‘Nil Rate Band’ (NRB) is currently £325,000 (2020/2021) and many people are still getting caught in the trap of property inheritance tax as the threshold has not kept pace with the inflation of property prices, and so is affecting more and more people.

There is also an additional ‘main residence’ allowance (‘Property Nil Rate Band’ (PNRB)) which applies if a person’s home is given to their children (including adopted, foster or stepchildren) or grandchildren. This is set at £175,000 (2020/2021) and is added to the IHT threshold providing a total allowance of £500,000 (2020/2021).

When a relative dies and leaves an estate worth more than £325,000 (2020/2021) or £500,000 (2020/2021) if the ‘main residence’ allowance applies, families are required to pay tax on the amount in excess of the NRB (and PNRB if applicable) within six months. After that, they are charged interest at a rate of 2.6% (2020/2021).

However, there are ways to lessen the burden of property IHT.

When you die, it is likely that you would wish to leave as much as possible for your loved ones. Unfortunately this is often not as simple as you might believe. HM Revenue and Customs (HMRC) will apply 40% tax to the value of your estate over and above that of the NRB (and PNRB) that applies at the time of death.

No IHT is applicable on ‘inter-spousal transfers’ (money/property/assets that is bequeathed by one spouse (or civil partner) to the other.

Your estate could include more than you originally realise. It is often easy to dismiss IHT as something that may not affect you as your property may not be over, or much over, the IHT threshold. However with all your other assets, such as investments, life cover, bank accounts, as well as physical property such as cars, furniture and family heirlooms, many estates are considerably over the threshold without the individuals being aware of it.

For assets passed between spouses and civil partners, the nil rate band allowance will pass along with the assets. This gives a couple available allowances (nil rate bands) of up to £650,000 (2020/2021), which increases to £1,000,000 (2020/2021) with the addition of the ‘main residence’ allowance detailed above.

For further information about the 2020 Budget changes please click here.

GENERAL ENQUIRY FORM

Marketing Information

Submit your Information

From time to time, we would like to contact you with details about our services, products, business updates and events. If you consent to us contacting you for this purpose please tick to say how you would like us to contact you:

Email
Telephone
Post
Yes please, I'd like to hear about offers and services.
No thanks, I don't want to hear about offers and services.
Please tick this box to confirm you have read and understood our privacy policy.

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Haworths Financial Services is an Appointed Representative of Quilter Financial Services Limited and Quilter Mortgage Planning Limited, which is authorised and regulated by the Financial Conduct Authority. FCA No: 494163.

Haworths Financial Services Ltd. Registered office: Suite 7, The Globe Centre, St James Square, Accrington, Lancashire, BB5 0RE. Registered in England and Wales, company number 5062508.

Tel: 01254 945945      Email: enquiries@haworthsfs.co.uk

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