Inheritance Tax Update 2017

IHT Update 28/08/2017

Inheritance Tax (IHT) is a tax at 40% on the value of your estate exceeding £325000 (nil rate band NRB) on your death. You pay tax all your life and you still get stung when you are 6 feet under. The NRB can be increased if you survive your spouse and they pass some or all of their estate to you. As the last to die this could give you on your death up to a further £325000, totaling £650,000.
The Government had tempted us with increasing the NRB to £1,000,000 but as always it never quite that simple. They have introduced a Residential NRB of an additional £100,000 as from April 2017, increasing by £25,000 over the next 3 years to a maximum of £175,000 in 20/21. By 20/21 the joint estates of married and civil partner couples could achieve £1,000,000.
In simplistic terms (meaning that you need to take advice) you have to die after April 2017, have or had a property in which you have resided, leave to direct descendants ( including their spouses, step and adopted children)and your total estate is less than £2,000,000. Above £2,000,000 there is a taper relief which can result in no saving. Downsizing is allowed. You can choose a property where you have more than one and you can trace proceeds of sale if you go into residential accommodation. If your spouse or civil partner has sadly already died, their allowance can still be transferred to you..
It will take time for the detail to become clear but there is scope to save IHT, and it would be prudent for you to take advantage of this additional tax saving by discussing your estate and Will with a professional.

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