Will Rishi Sunak and Chancellor Jeremy Hunt reduce the 40% inheritance tax (IHT) rate?
£325,000 is the tax-free threshold of an individual's estate. This can increase to £500.000 if the home is transferred to a child or grandchild. No inheritance tax is payable when a home is transferred to a spouse. This does not mean someone you are living with, a common-law husband/wife. So many people think they will have the same rights as married couples if they have lived together for years. They don't!
Transferring Allowances
Married couples and civil partners can use transferrable tax-free allowances and residence nil-rate bands to reduce their IHT liabilities. This allows them to pass on more of their wealth to the next generation while still reducing the amount owed in taxes. Additionally, if one partner passes away before the other, any unused portion of their allowance can be transferred to the surviving partner. This means that even more of the estate can be passed on without incurring inheritance tax charged as an IHT liability.
Gifting Assets
Consider gifting assets to reduce your inheritance tax liability. Gifts of up to £3,000 per tax year are immediately exempt from Inheritance Tax and can be given to as many people as desired within a single tax year without being subject to IHT. Additionally, any gifts made by the deceased person that have been held for more than seven years are usually exempt from Inheritance Tax. It's important to keep accurate records of all gifts made so that they can be verified if necessary.
Is this an unfair Tax?
It has been said that this is a death tax! What do you think?
Inheritance tax advice
It is wise to get advice from a law firm, like us, a financial advisor, and an accountant to mitigate your inheritance tax bill. Remember, this is not a bill you will pay but most likely your children and grandchildren. Will they be able to pay the tax bill? Probate is not granted until the tax bill is.
Today's Wills and Probate (2023, November 17). Sunak and Hunt consider IHT cut in upcoming Autumn Statement Kathie Johson reports. https://todayswillsandprobate.co.uk/sunak-and-hunt-consider-iht-cut-in-upcoming-autumn-statement/