The Spouse Exemption shouldn’t be all you rely on. Inheritance Tax is the tax levied on the estate of a person who has died, which applies (at 40%) once assets pass above a certain threshold, depending on a number of factors. For those who are looking to reduce Inheritance Tax, recent newspaper reports have highlighted the complexity of doing this properly and the fact that the current spouse exemption should not be relied on in isolation.
Richard Neea, Head of Wills, Tax and Probate at Enoch Evans LLP comments that ‘It is widely understood that on death, asset transfers between spouses and/or civil partners are totally exempt from Inheritance Tax. This exemption is hugely useful due to its simplicity and should always be something you look to utilise as part of your Inheritance Tax planning, if it is available. However, it should always be remembered that spouse exemption is, at the end of the day, only a Tax deferral as when the surviving spouse or civil partner passes away, their estate will become taxable if it is above the Inheritance Tax threshold at that time. Inheritance Tax planning should always be looked at holistically and there are usually a number of ways someone can mitigate their liability depending on their circumstances and attitude. Relying on spouse exemption alone is likely to leave people exposed to large tax bills later on.’
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’).