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Easing the burden – navigating inheritance tax

Inheritance Tax (IHT) often raises eyebrows, particularly when assets that carry emotional or familial significance are involved.

Frequently dubbed the “death tax,” it’s nevertheless something you can’t afford to overlook if you want your family to continue to benefit from your assets.

There has been a notable increase in the number of families susceptible to IHT, which can be attributed to stagnant tax allowances and inflating property markets.

Current legislation

Under the existing law, estates with a net worth exceeding £2 million begin to forfeit a tax relief known as the residence nil-rate band.

This supplementary allowance provides each individual £175,000, enabling married couples and civil partners to amalgamate this allowance with the standard nil-rate band of £650,000 per couple, thereby passing on up to £1 million entirely exempt from IHT.

Despite soaring property valuations, this specific allowance has remained static since its 2017 inception and is slated to persist at this level for an additional five years.

Growing concerns

A recent Telegraph report suggests an uptick in the number of families impacted by these regulations.

While only 2,200 families faced this issue five years ago, projections indicate that the annual figure will more than double, reaching over 5,000 by 2028.

The root cause is the government’s choice to maintain the current nil-rate allowances in the face of ever-increasing property prices.

How will I be affected?

For homeowners with estates tipping the £2 million mark, this beneficial tax relief starts to erode, diminishing by £1 for every £2 exceeding the threshold.

Estates valued over £2.7 million lose this allowance entirely. Thus, if you find yourself close to or over these thresholds, proactive estate planning becomes vital.

Gifting, establishing trusts, and employing other tax-savvy strategies could potentially lessen the sting of these IHT revisions.

What the experts recommend

We highly advise a thorough review of your estate and a consultation with our expert accountants to identify the best route forward, based on your circumstances.

We’ll help you carefully manage your assets, particularly your family home, to assure they are inherited as tax-efficiently as possible.

For a consultation or further advice, please don’t hesitate to contact us today.


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