Posted On / 03.04.2015

Leave an Inheritance, Not a Tax Bill

Leave an inheritance, not a tax bill

A friend was commenting the other day about how soaring house prices could be a mixed blessing to some. On one hand, you may be sitting on an asset that is accumulating value and giving you financial security into your old age. On the other, a higher valuation can put you over the threshold for what some people still refer to as death duty.

Now called Inheritance Tax (IHT), this is money payable to Her Majesty’s Revenue and Customs based on an evaluation of your estate on death. This includes property, cash and investments.

Should you worry about IHT? You should certainly be aware of it, so that you can plan accordingly and in some situations save thousands of pounds.

The first thing to note is that we all have an IHT allowance. This means the first £325,000 of your estate is free from IHT. Anything above that is taxed at 40%.

Secondly, be aware of the exemptions. Gifts to your spouse, civil partner or charity on your death are exempt from IHT however big.

Remember though your children are not exempt beneficiaries and a cohabitee has no preferential IHT status. Gifts to any of those people on your death are possibly chargeable.

If you or your spouse or civil partner, together have an estate valued at between £325,000 and £650,000, you may find that a Transferable Nil Rate Band (TNRB) would apply and help you in any IHT planning.

As of April 2017 we shall have the introduction of the Residential Nil Rate Band (RNRB) which could give you an additional £100,000 in addition to your £325,000 if certain conditions are met.

There are also various lifetime exemptions that can assist with IHT planning such as gifts on marriage, an annual gift exemption of £3,000 and regular gifts of excess income.

If you are a business owner or farmer, exemptions such as Business Property Relief and Agricultural Property Relief may apply to you.

The key with IHT is to obtain advice from your solicitor as to what would apply for you and your circumstances.

To discuss the best way forward for you, send an email to  or call me on 01929 500323.