When someone dies, the first £325,000 of their estate can pass free of inheritance tax so long as this allowance has not been used up by qualifying gifts made during their lifetime. Unless an exemption applies (for example because the estate passes to their spouse or to charity, or because the assets making up the estate are exempt) then the balance of the estate will be chargeable to inheritance tax at 40%.
However, the government introduced an enhanced allowance from inheritance tax where the family home passes to descendants. This additional allowance was capped at £100,000 for deaths from 6 April 2017 to 5 April 2018, but from 6 April 2018 the cap will increase to £125,000, meaning that up to £450,000 could pass before inheritance starts becoming payable. This cap will continue increasing until it reaches £175,000 for deaths after 6 April 2020, allowing up to £500,000 to pass in this way.
Furthermore, if the first of a married couple (or registered civil partners) to die leaves their entire estate to the survivor, and the survivor dies after 6 April 2018 leaving their family home to descendants, then the survivor will be able to utilise both their allowances, enabling up to £900,000 to pass through their estate before inheritance tax starts becoming payable. This figure will increase to £1,000,000 for deaths after 6 April 2020.
Therefore, if inheritance tax is a concern, this could be extremely valuable to you and it is essential to ensure that your Will is correctly structured to take advantage of your full tax allowances.
Our specialist wills and probate solicitors can review your circumstances and assist you in ensuring that your Wills meet your needs.
We are on hand to help with any queries you may have in regards to Wills and Probate issues. Our wills and probate solicitors are based in Wakefield, Dewsbury, and Horsforth. Feel free to call us on 0330 300 1103 or request a call back by clicking here