Inheritance tax freeze
Individuals are advised to seek advice sooner rather than later to ensure their loved ones are not caught out by Inheritance Tax (IHT) at a later date.
Despite pledges in 2007 by the Conservative Party that the IHT threshold would be increased to £1 million if it came to power, and a further announcement last year that it would rise by 1% from 2017, the Government has now confirmed that the current threshold will remain frozen until at least 2019 – an extension on the existing five-year freeze imposed in 2010.
At present, IHT is levied at a rate of 40% on assets of £325,000 or more per person (£650,000 for couples). The continued threshold freeze means that thousands more families are likely to be dragged into this tax through the effects of inflation, with an increasing number of basic-rate taxpayers now living in homes worth more than that.
While no one wants to think about what will happen when they die, the truth is that it is never too early to plan ahead to mitigate any Inheritance Tax liabilities and ensure that your estate goes to your loved ones, rather than the taxman’s pocket.
There are many exemptions and allowances available under current rules to reduce the tax cost, but the more valuable ones are often conditional upon taking early action, typically at least seven years before death. Families who believe they could be affected by the ongoing freeze on the threshold should seek expert advice as soon as possible to ensure that they are not caught out by this.
For further information, please contact Nigel Martin at our office.
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