Is your will tax efficient?
When you are preparing a will, it is an opportunity to consider whether your affairs could be structured differently, to take best advantage of the various inheritance tax (‘IHT’) reliefs available on death.
Currently every individual has an IHT allowance (known as the ‘nil rate band’) of £325,000. To the extent that the value of an individual’s assets on death exceeds the nil rate band, IHT is charged on the ‘excess’ at the rate of 40%.
On 6 April 2017, the Government introduced a further relief, known as the ‘residential nil rate band’ (the ‘RNRB’) which is available in circumstances where residential property is left to direct descendants. The RNRB is currently set at £100,000 but is set to increase at yearly increments of £25,000 until 2020 when it reaches £175,000. The net effect of this, is that by 2020 the available nil rate band and RNRB, when combined, will be £500,0000.
Careful planning is required in order to ensure that you do not lose your RNRB. Depending on your circumstances, this new IHT relief can prove complex and a failure to prepare a will or otherwise review the terms of your existing will could result in the relief being lost and your loved ones having to pay tens of thousands of pounds in IHT unnecessarily.
If you would like one of our will experts to review your existing will for free, to see whether any changes need to be made, contact us today.
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