Inheritance Tax (IHT) was once the preserve of the wealthy, but with consistent rises in the value of property and static tax allowances, many of us are now exposed to paying an ever-increasing amount of IHT.
Inheritance Tax
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Inheritance Tax
Since 2008 house prices have increased by 16% as a UK average, with some of the hottest areas seeing 75% increases. This sounds great as you are seeing a substantial growth in your asset but is leading to potential additional taxes that you didn’t anticipate or plan for.
HMRC has therefore seen a steady annual increase in IHT receipts, up 75% in the last 5 years to approximately £7 billion in 2022/2023.
Current tax-free allowance 2022/2023
Nil Rate Band (NRB)
Single Person – 325,000
Married Couple/Civil Partnership – 650,000
Residence Nil Rate Band* (RNRB)
Single Person – 175,000
Married Couple/Civil Partnership – 350,000
Total Allowance
Single Person – 500,000
Married Couple/Civil Partnership – 1,000,000
* Additional allowance available to be claimed by the estates of homeowners who leave their residence to direct descendants.
EVERYTHING OVER THIS AMOUNT IS TAXED AT 40%
This includes cash, investments, life insurance policies, premium bonds, classic cars, art works, jewellery or any assets that are deemed valuable that may take your estate over the above allowances.
So it doesn’t take that much for your asset value to take you over these limits and into a world that you never envisaged would be applicable to you.
At present there are a number of intelligent actions and rules you can take to minimise your exposure to IHT and we have access to expert professional partners who specialise in this area. So, if you have a future potential liability which will diminish what you would leave to your beneficiaries and want to do something about this, you should act now and contact us for a no obligation initial discussion.
Do not leave your legacy for someone else to decide. Start to put the wheels in motion today, ensuring that your later years are happy, comfortable and stress free.
