Inheritance Tax – A message from our Private Client Partner

When I meet with clients to look at their affairs, I am often asked about how to protect their assets and ensure their loved ones receive the maximum inheritance from them.  With changes to inheritance tax rules over the last Government, the picture from an Inheritance Tax (IHT) point of view has not been as bad as people have thought, as the tax rules and allowances available to most people have been changed for the better.  My conversation is then often about how to protect against care home fees and the things that we can do here to help.

My conversations more recently however have had to be a bit more speculative around the question of IHT as there is a lot of talk about the new Government making multiple changes to the IHT rules and allowances.

Everyone currently has an allowance of £325,000, and this amount hasn’t changed for some time. Over recent years, a new allowance of £175,000 has been included, but this is only if you have children or grandchildren and are leaving the family home to them. This allowance is, however, capped, so if your estate is large, this allowance is not available to you.

A further change that was historically introduced was the ability to have your allowances pass to your spouse or civil partner, so these were not lost on the death of the first person. Effectively, a couple who are married or in a civil partnership could have £1,000,000 of allowances available to them before they need to worry about IHT.

There are several other allowances that are available that will not apply to everyone around making of lifetime gifts, reliefs on business and agricultural assets etc.  It may be that this is where they are going to make their changes, and the general allowances are safe.

We do not yet know how this will affect people, and we will know more on budget day, so stay tuned for more information.

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