The news that HMRC is projected to receive more inheritance tax (IHT) than initially forecast over the next five years should ring alarm bells for people with estates that are likely to be valued over the IHT threshold. IHT planning should now be a fundamental part of estate planning for everyone in this situation.
Inheritance Tax is a tax on the estate (the property, money and possessions) of someone who’s died. It is charged at a rate of 40% on estates valued above a certain threshold, which is currently £325,000.
There’s normally no Inheritance Tax to pay if either:
If you give away your home to your children (including adopted, foster or stepchildren) or grandchildren, your threshold will increase to £425,000.
If you’re married or in a civil partnership and your estate is worth less than your threshold, any unused threshold can be added to your partner’s threshold when you die. This means their threshold can be as much as £850,000.
The latest forecasts from the Office for Budget Responsibility (OBR) suggest that by 2022 HMRC will receive £900 million more in IHT that it had expected, reports the Daily Mail.
As recently as March this year, OBR projections indicated HMRC should expect to receive £32.4billion in IHT between 2016 and 2022. This projection has now been raised by close to £1billion because of increases in the projected death rate and rising house prices pushing more estates over the IHT threshold.
For expert legal advice on estate planning, including inheritance tax and writing a will, then contact our specialist solicitors today.
Contains public sector information licensed under the Open Government Licence v3.0.