Inheritance Tax...some good news!
Adrian Bell | 31/03/2008
The new Chancellor, in his first pre-Budget report, introduced the concept of transferable Inheritance Tax (IHT) Nil Rate Bands for married couples and civil partners. This simplified the existing law and will enable all couples to take full advantage of up to two times the IHT Nil Rate Band without necessarily having to set up Trusts following the death of one half of the couple. The new rules are particularly beneficial for those who have been widowed for some time.
Example: June has been a widow since 1980. On her husband’s death she inherited the whole of his estate.
On June’s subsequent death her Executor can now claim two times the prevailing Nil Rate Band at that time.
On current figures this means no IHT is payable on the first £600,000 of June’s estate. This is because two times the current Nil Rate Band of £300,000 can be claimed. (This example assumes that no lifetime gifts have been made.)
The new law contains, as you might expect, a lot of detail. The legislation, together with the explanatory notes, extends over 12 pages with a number of complicated formulas designed to cover every eventuality.
If we have already drafted a Will for you that contains an IHT Nil Rate Band Trust, you almost certainly do not need to change it. Our Wills are written on flexible terms and enable decisions regarding implementing the Trust, or simply advancing the assets outright to the surviving spouse, to be taken by the Executors within the 24-month period following the first death
There may, at that time, be other reasons for implementing the Trust, such as protecting assets ? half the house, for instance - from having to be used to pay for nursing home fees by the survivor.
The members of our Tax, Trusts and Estates team in Brighton, Hassocks and Henfield have met to discuss the impact of the new law and are happy to talk with you if you have any concerns. They can also provide you with an illustration of how the new law affects your potential liability to IHT. To find out more, contact the team on 01273 324041.
The information and options contained in this article are only intended as a general view of the subject concerned. Specific advice concerning individual situations should always be obtained from the usual contact at Griffith Smith Farrington Webb LLP. No part of the publication may be produced without the express written permission of the individual author.
