INHERITANCE TAX (IHT)
Currently IHT is payable at a rate of 40 per cent the amount of an Executry Estate which exceeds the tax threshold of £325,000 although assets left between spouses are exempt if the couple are both domiciled in the UK. Even those with relatively modest homes can, therefore, find themselves subject to a tax that was previously perceived as only being a concern for the wealthy.
Although presently spouses can effectively use the nil rate band of each other if a husband dies leaving his whole estate to his wife, then everything is exempt due to the current exemption between husband and wife, but on the death of the wife, she can also use the nil rate band of the deceased husband, so effectively at present, that equates to 2 x £325,000 = £650,000. Above that level however, Inheritance Tax is payable at 40% and there are various ways of mitigating or reducing such tax. McLean & Stewart would be happy to advise.
Another key consideration is the range of IHT reliefs and exemptions available for outright gifts. You are, for example, able to gift up to £3,000 in any one tax year, plus any unused balance of £3,000 from the previous tax year. You are also able to give away an unlimited amount via a regular income as long as you can show that your standard of living is not affected. Here at McLean & Stewart we can help you to minimise your eventual IHT liability and plan for the future.