This tax was introduced by the Finance Act 1986 and replaced Capital Transfer Tax on death.
For most, the risk of there being an inheritance tax charge on their death is minimal. However, for wealthy individuals the thought of paying 40% of their assets to HM Revenue and Customs is an unwelcome one.
There are reliefs available, however.
Transfers between spouses and civil partners are all exempt from inheritance tax, as are gifts to charity. There are further reliefs available for business and agricultural property.
The first £325,000 of every person’s estate passes free of inheritance tax. This portion of the estate is taxable, but it is taxed at 0%. This is commonly known as the Nil Rate Band.
In addition, in certain circumstances, there is a further tax allowance available which relates to the value of your property. This allowance, from 6th April 2020, known as the Property Nil Rate Band, is £175,000.
It is possible, therefore, from 6th April 2020, that families can pass up to £1,000,000 of assets to their chosen beneficiaries before any inheritance tax may become due,
If you have any questions or concerns about inheritance tax call us now on 01257 686386.