Inheritance Tax (‘IHT’) is a 40% tax levy charged after someone dies, should their estate exceed certain levels. It is payable by the estate prior to distribution and therefore effectively reduces the amount available to the beneficiaries. A number of IHT reliefs do exist, which can depend on your circumstances and/or how your Will deals with the distribution of your estate.
In 2017 a new exemption, the Residence Nil Rate Band (‘RNRB’) was introduced and allows additional IHT relief to be claimed, up to the value of £150,000 if your circumstances fit certain criteria and your ‘residence’ passes to allowable beneficiaries. The RNRB can also be transferred to a surviving spouse and so double to a maximum of £300,000 currently, at the time of the second death. Therefore, if used by an estate to its maximum the RNRB can save £120,000 in IHT. The RNRB is also due to rise to £175,000 for deaths after 6th April 2020, meaning a total additional IHT saving of £140,000 will then be possible to those who are eligible.
Richard Neea, Partner and Head of Wills, Tax and Probate at Enoch Evans LLP explains that, ‘the introduction of the Residence Nil Rate Band has increased the Inheritance Tax reliefs available to people’s estates, but has made Will writing more complex and the need for Wills to be reviewed more important. It has always been important to regularly review your Will to ensure it meets with your wishes. However, particularly if your Will was made before 2017, due to the introduction of the RNRB, you should speak with an expert to see if you need to take any action and find out whether any Inheritance Tax can be saved by doing so.’
The expert lawyers in the Wills, Tax and Probate Department at Enoch Evans LLP have a wealth of experience in advising upon reducing Inheritance Tax and the options available in your particular circumstances . The Department based in Walsall and Sutton Coldfield are also experts in Wills, Lasting Powers of Attorney, Estate Administration and Trusts. The Department is accredited by the Law Society with membership of its elite Wills and Inheritance Quality Scheme (‘WIQS’).