I read in the National Press the other day that an extra £100 million was taken in Inheritance Tax in just two months during April and May this year. With frozen death tax allowances each individual will benefit from the Nil Rate Band of £325,000 increasing to £650,000 for married couples and civil partners. There is potentially an additional Residence Nil Rate Band for each spouse if they qualify. Even with both the Nil Rate Bands and the Residence Nil Rate Bands on the second death of a married couple or civil partners, assets above £1 million will be liable to inheritance tax of 40%.
To make matters worse the Nil Rate Band and the Residence Nil Rate Band have been frozen until 2026. So many more people will be giving away 40% of their estates over the next few years.
There are many ways to reduce Inheritance Tax but many of us feel that we will be around a long time and tend to defer addressing these important matters. Inheritance Tax is a voluntary tax and we can easily take steps using legitimate Government approved plans to reduce or even eliminate this awful tax if we bother.
I helped one gentlemen only recently – his parents died and the Inheritance Tax bill was in excess of £2.5 million which has to paid within six months from the end of the month, from the date of death, otherwise interest will be added to the liability.
Trevor Downing FPMI FPFS
