At the Raymond James East Yorkshire Branch we specialise in helping our clients pass on their wealth as tax efficiently as possible.
Inheritance tax (IHT) is a tax payable to Her Majesty’s Revenue & Customs (HMRC) on money or possessions you leave behind when you die, and on some gifts you make during your lifetime.
Every individual has what is known as a Nil Rate Band (NRB) of £325,000 and as long as your estate is valued below this level there is no inheritance tax to pay.
For people who are married, in a civil partnership or widowed, the threshold for Inheritance Tax is currently £650,000 between them (based on them transferring their NRB to their spouse).
For anything above your individual or joint allowance tax is payable at 40%. For example, if your estate as an individual was valued at £525,000, then £80,000 would be due in inheritance tax because the rate of 40% is charged on the extra £200,000 above the Nil Rate Band (NRB).
If you are the first person to die and you are married or in a civil partnership you can leave everything you own to your partner, and there will be no inheritance tax to pay at the point of your death.
However, depending on the size of your partner’s estate at their death this will affect their liability at that time, so it’s important if the total value of your estate is near or above the threshold level you seek professional help to make sure your succession planning is as tax efficient as it should be.
Making Gifts in your life time:
As well as your estate being assessed at the point of your death, inheritance tax may also be payable on any gifts you make during your lifetime so it’s important to know what gifts you can make as well as when they cease to become relevant for IHT.