Inheritance Tax (IHT) is paid on property and assets gifted by an individual during their lifetime or held at the time of death.
In the 2012/13 tax year, IHT will hit estates worth over £325,000 and this value will remain frozen until 2014/15, but we know it will then be indexed against the CPI measure of inflation. IHT affects more families than ever. Together with the fact that HM Revenue & Customs have tightened their attitudes on personal taxes, e.g. with the rules on pre-owned assets, it is more important than ever to seek early advice.
It is worth noting that since October 2007, you can transfer any unused IHT nil rate band from a late spouse or civil partner to the second spouse or civil partner when they die. This can increase the IHT nil rate band of the second partner – from £325,000 to as much as £650,000 in 2012/13, depending on the circumstances.
With sound professional advice, many people who would have paid high levels of IHT could have reduced their tax bill. IHT should not be a nasty shock and indeed there are exemptions and reliefs that may apply to you.
Our specialists at Mercer & Hole can keep on top of the form filling and administration required in the calculation of IHT and provide tax planning advice. We can also recommend solicitors to you, if it would be advantageous to redraft your Will to be more tax efficient. Tax planning advice that is appropriate to your situation, accurate and cost efficient should help in the planning of your family’s affairs to keep IHT charges to a minimum.