After much speculation in the press that there would be a complete inheritance tax overhaul, Rishi Sunak announced in the budget this afternoon that no changes to inheritance tax would be made. Julie West Solicitors private client solicitor Emma West explains how current allowances work:
The current inheritance tax allowance for an individual on death is £325,000 (the nil rate band) subject to any chargeable lifetime gifts. Gifts to a spouse and also to charities and political parties are exempt from inheritance tax. To the extent that that the allowance is unused on the first death, for example where the estate passes to a surviving spouse who is an exempt beneficiary, then the personal representatives of the second spouse to die can apply to transfer the unused allowance giving a total allowance of up to £650,000.
There is also an additional allowance when a property, or proceeds of a property, that you have lived in at some point (qualifying residential interest), are inherited by a direct descendant (including stepchildren). The allowance for the current tax year is £175,000. This allowance (the residence nil rate band) is also transferable and gives a total combined allowance of up to £1 million for a married couple with qualifying estates. The legislation provides that the residence allowance will be reduced by £1 for every £2 the estate exceeds £2 million. As a result, the additional residence allowance is not available to estates with a value of £2.4 million and above.
Other exemptions are available for business property, agricultural property, certain types gifts as well as gifts given from excess income.
Julie West Solicitors:
Include basic inheritance tax advice with all will instructions
Are able to provide specialist inheritance tax and lifetime planning advice
Offer a will review service to check whether you need to update or change your will free of charge
Private client solicitor Emma West
Julie West Solicitors are able to assist with all aspects of private client work including:
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