Change to Inheritance Tax – what does it really mean?

14th July 2015

Change to Inheritance Tax – what does it really mean?

 

The budget saw the government make changes to inheritance tax with the headline being that the nil rate ban for a married couple or civil partners could be £1M. 

It is true that this is the case in certain circumstances but it isn’t a straightforward increase of the nil rate band from £325,000 to £500,000 per person. The reality is somewhat more complicated than that as the nil rate band per person remains frozen at £325,000 with an extra top up of £175,000 being phased in over a number of years commencing in 2017/18 relating only to an individual’s main residence.  Any un-used nil rate band can be transferred to surviving spouses or civil partners and ultimately estates must be passed to direct descendants. 

There are also provisions to cover downsizing from the main residence or when someone ceases to own a main residence and a tapered reduction in the value of the nil rate band for estates exceeding £2M.  

The government have also said the final details are still subject to technical consultation. 

As ever, despite these increased limits, inheritance tax is still a complicated area of taxation and in fact, it could be argued, is now more complicated than before, requiring careful planning in order to minimise the impact of this tax on what you hope to leave to loved ones. 

Contact us to discuss this in more detail on 01273 701200 or info@plusaccounting.co.uk 

 

Written by Matthew Benton, Senior Manager at Plus Accounting, Chartered Accountants

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