Are your legacy affairs in order?
Individuals are warned that they could face higher inheritance tax (IHT) bills than they expected, after new research shows a significant increase in payments to the Treasury.
Recent analysis of HM Revenue and Customs’ (HMRC’s) tax figures for 2012/2013 has revealed that the cost of passing on wealth to the next generation had increased by three per cent in one year.
During this period – the latest for which figures are available – the British population paid more than £3 billion to the Treasury in IHT, while the average death tax bill rose almost £5,000 in a year to £170,000, despite the fact that only 17,900 (six per cent) of the 280,000 estates reviewed, actually ended up paying IHT.
As house prices continue to rise, more and more people are finding themselves liable to IHT, particularly those with more than one property or a property in a high-value area.
However, all of this could be set to change following new IHT rules due to be introduced from April 2017.
Under the new rules, announced in the Chancellor’s Summer Budget, individuals will be entitled to a family home allowance, in addition to their existing individual £325,000 IHT allowance.
This new allowance will be phased in over the coming years and will allow married couples or those in civil partnerships to pass on a property worth up to £1m tax free by 2020/21.
People need to start thinking now about how this new allowance will affect their legacy planning and they should consult a professional to ensure that they are able to make the most of the upcoming changes.
For more information please contact Tim Preece or your usual contact here at the office.
Author: Tim Preece FCCA
A former pupil at Lancaster Royal Grammar School, Tim joined Scott & Wilkinson in 1992 as a trainee after completing a degree in Maths and Economics at Leeds University and qualified as an Accountant in 1996. Tim was...
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