Lasting Power of Attorney
The UK population is expected to rise to almost 75 million by 2039, with more than one in 12 people aged over 80. A 55-year-old male today can expect to live for another 31 years on average and a woman age 55 today can expect to get close to her 90th birthday.
Deeds of variation remain unchanged
Following the revelation that Ed Miliband had been “accused” of using perfectly legal means of avoiding IHT by using a deed of variation – that moved ownership of some of the family home into his and his brother’s names – the government decided to review these arrangements.
Alternative Investment Market (AIM) can be a tax perk for IHT
Making full use of the various opportunities to give money away is one available option to reduce your inheritance tax bill. Another way to take money out of your estate is to invest in small companies.
Making gifts to reduce Inheritance Tax liability
Giving away your wealth during your lifetime is one of the easiest ways to reduce a future inheritance tax (IHT) liability and can also be an effective way of saving your heirs a significant IHT bill.
Downsizing and the Residence Nil Rate Band
From 6 April 2017, the government will phase in a new residence nil-rate band, for when a residence is passed on death to a direct descendant. In addition to the Residence Nil Rate Band (RNRB) that can be used upon death, HM Revenue and Customs have confirmed an estate would also be eligible for the proportion of the residence nil-rate band that is foregone as a result of downsizing or disposing of the property.
Raising of the Inheritance Tax limit
The raising of the Inheritance Tax limit, announced by Chancellor George Osborne this summer, comes with a lot of caveats. The increase is a special Inheritance Tax concession made available only for family homes of people with children.
Distinguishing between Agricultural Property Relief and Business Property Relief
Inheritance Tax (IHT) is payable on death on a person’s estate above their nil rate band (currently £325,000) at a rate of 40%. In addition transfers out of a person’s estate by way of a gift are also taxable at a rate of between 20% – 40%, the rate charged being dependant on the nature and timing of the transfer.
Complexity of Inheritance Tax planning
The UK faces one of the highest effective rates of inheritance tax of any country in the developed world. Currently in 2015 it is 40% of any non-exempt assets over £325,000. Only France beats the UK in the G7 countries on that front.
Conservative Party propose a “Family home allowance of £175,000”
The Conservative party have announced that if they are re-elected, then from April 2017 parents would each be offered an additional £175,000 “family home allowance” to enable them to pass property on to their children tax-free after their death.