Summer EngAGE

What if I my estate
is worth more than
£325,000?
The nil rate band is doubled
up for married couples and
civil partners to £650,000.
Under new rules, parents
who leave their home to their
children can qualify for an
additional exemption of up
to £100,000 each, rising to
£175,000 each by April 2020.
© designer491, Jacob Lund / shutterstock
Inheritance tax
Stuart Maggs is a Partner at Howes Percival where he
specialises in estate planning and advice around
inheritance and capital gains tax. Here he offers some
guidance regarding inheritance tax after the election.
In light of the recent
election, the only
certainty is that the
future is less clear. It
must be likely that a minority
Government will only attend
to their highest priorities.
What is inheritance tax?
Inheritance tax raises less
than 1% of UK tax but attracts
a great deal of attention.
Some see it as a good way of
redistributing money from the
rich to the poor; while others
think it is the government
taking away money they
have already taxed once.
Regardless of your beliefs it
is unlikely this government
will make any big changes.
after the election
Does a Will help?
If you want to minimise inheritance
tax, the first thing is to have an
up to date Will that properly
reflects your wishes. All the
tax savings in the world won’t
mean a thing if your estate is
inherited by the wrong people.
Even worse, a poorly drafted
Will can lead to arguments and
lawyers’ fees as people fight over
the estate when you’re gone.
It is helpful if your heirs know
what to expect, and the terms
of your Will do not come as a
shock to them. Explaining your
wishes beforehand can help
deal with any frustration from
people not knowing why they
are being treated differently.
Will my estate pay tax?
Most people in the UK
never have to worry about
inheritance tax. If your total
estate (including your home)
is less than £325,000 – your
‘nil rate band’ - there is
normally no tax to pay.
Additionally if you can afford to
make gifts to individuals and
you survive seven years, those
gifts are ignored for inheritance
tax. Giving cash is normally
fairly straightforward, but if
you give property or assets
there might be capital gains
tax charges. If you survive
less than seven years or if you
benefit from the gift (e.g. giving
your home away but continuing
to live there), the value is
added back into your estate.
There are reliefs for business
assets and some types of
shares, as well as for farms.
Charitable gifts are exempt
from inheritance tax, and
if you give 10% or more of
your estate to charity the tax
rate paid by your remaining
estate drops to 36%.
These rules are hugely
complicated. They make
allowances for people who
downsize their home before
death, to avoid trapping people
in houses that are too big
for them. But if your estate
is worth more than £2m, the
extra exemption above the
normal nil rate band falls away.
Careful structuring of your
assets and Wills can save your
children £140,000 in tax.
With all estate planning, the
key point is to seek help from
someone you can trust.
While there is a lot of
information available on
the internet, there is no
substitute for taking expert
professional advice.
If you would like more
advice on wills or taxes
please pick up one of our
leaflets designed to help
you with your will which can
be found in our shops or
online (www.ageukleics.
org.uk/publications)
12 | sUMMER 2017 www.ageukleics.org.uk