Do your assets exceed £325,000?
Historically, relatively few estates attracted Inheritance Tax (IHT) but this has changed radically in recent years because of soaring house prices, particularly in London and the South East. According to recent estimates, this sharp increase in property values and the slower rise in the “Nil Rate” (tax exempt) Band has left around 1.8 million homeowners now vulnerable to IHT.
When you die, your heirs pay 40% IHT on everything you leave above £325,00 (in the current tax year). Married couples (and Civil Partners) can certainly avoid exposure to IHT on first death by taking advantage of the fact that there is no tax on assets that pass between spouses or civil Partners. However this only delays, not avoids, a tax bill. The New Residential Nil Rate Band, that applies to those with property in excess of the Nil Rate Band can now also increase your personal allowance up to a maximum of £500,000 per person. (Phased in from 2016 to 2020)