IHT is a tax on your assets when you die. Under current legislation every individual has an IHT free allowance (called a nil rate band) on death of £325,000.00. If you are single and have no planning in place anything you leave over £325,000.00 will be taxed at 40%. Married couples each have a £325,000.00 nil rate band giving a total IHT free allowance of £650,000. With no planning in place IHT at 40% would be payable on the balance of assets over £650,000.
With the continued increase in value of residential properties it is not uncommon for the value of the home to take the majority if not all of the available IHT free allowance. This could mean a large portion of your estate including your home could be taxed at 40% before it is passed on to your chosen beneficiaries.
Your estate may qualify for an additional tax-free allowance called the residence nil rate band that may apply. It is incredibly complex. It is unclear whether this will survive the current governmental inheritance tax review.
With careful planning it may be possible to pass on all your assets to your family tax-free. The calculation to assess whether IHT is potentially payable on your death can be done now and if necessary, planning can be put into place to protect your assets.
After careful consideration of your own lifetime needs planning would be put in place to ensure you had adequate accessible assets for future living expenses and other events such as care fees safe in the knowledge that the remainder of your estate will pass IHT free on your death to your chosen beneficiaries.
Harvest Estate Planning 