Since the pre budget statement in October 2007 married couples/civil partners are able to use a double nil rate band. Therefore, on second death there is an effective allowance of £650,000 provided that at first death the total Estate was passed to the surviving spouse.
A new residential property nil rate band was introduced in April 2017. This has been increased in stages and is now £175,000 as at April 2020. This means that a couple can leave a property and other assets up to £1 million free of inheritance tax. This only applies when the property is being left to direct descendants such as children or grandchildren. If your property is left to a discretionary trust this allowance will not apply.
However, for most people action is still necessary, when you consider Pre-owned Assets Tax and the recent alteration of Trust taxation, which threaten plans to avoid IHT. So it’s easy to see why other IHT planning methods are becoming increasingly popular. Many of our clients are taking advantage of the Discounted Gift Trust which is very effective. This Trust is structured to allow you to continue to enjoy an income from capital, still under your control but outside your estate.
Talk to us. We’ll make life less taxing.