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Claudia Roberts, Partner at Glanvilles, provides an update on important developments relating to Inheritance Tax.
You may have heard the recent announcement that the Inheritance Tax (IHT) free band has been frozen at £325,000 until 2015/2016 when it will rise to £329,000. Thereafter, the band will likely continue to rise by a mere 1% per year for the foreseeable future – so much for the promised £1,000,000 tax free band!
Yet inflation is running at an average rate of 3.5%. Consequently an increasing number of estates, which are currently below the IHT threshold, will now fall into IHT territory and estates already within the IHT territory will suffer even more tax! After 10 years an estate with the current value of £325,000 would, through inflation alone, have a value of £460,000. However, the tax free band will have risen to a mere £360,000 – so suddenly what was a tax free estate could suffer IHT charges of £40,000. An estate with a current value of £500,000 could suffer additional IHT of £68,000 ten years down the line. Hence this unpopular tax (being charged at 40% on everything that has already been taxed at least once) will catch out even more of us in the future - But you don’t have to be among those caught…
Our tax experts at Glanvilles can help you to avoid or significantly reduce your estate’s IHT liabilities through timely and proactive planning. Planning may include:
• making IHT efficient Wills
• maximising IHT reliefs and utilising IHT exemptions
• using financial products that are specifically designed to reduce IHT