Yet if the value of your loved ones' inheritance is above your threshold, they might have to pay an inheritance tax bill that could amount to thousands of pounds.
What is your personal threshold?
Your inheritance tax threshold is £325,000 if you’re single or divorced or up to £650,000 if you’re married, in a civil partnership or widowed.
The government is gradually bringing in a residence nil rate band – worth £125,000 per person for the 2018/19 tax year. This can be used in addition to your main threshold and only applies if you are passing on a property that you have lived in, which has been inherited by a direct descendent (children or grandchildren).
What makes up your estate for inheritance tax?
Your estate is not just your home. It includes almost everything you own – your car, your savings and investments, your jewellery, your antiques, and even your home furnishings. It could also include gifts you have made within the last seven years. It might surprise you just how much your estate adds up to.
Since the main inheritance tax thresholds were raised to £325,000/ £650,000 in 2009, annual inheritance tax revenue has more than doubled to reach record high levels – and it’s forecasted to keep rising^. The traditional view that it only affects the richest people has changed. If you’re not sure if your loved ones will be affected, it’s important to find out.
How can we help?
Firstly, we can support you in finding out if inheritance tax is something you need to plan for. We can guide you through calculating the value of your estate, and – if inheritance tax might apply – help you to consider your next steps.
By taking the time to understand your circumstances and objectives, we can present personalised recommendations to start addressing any inheritance tax liability. Some inheritance tax solutions require at least seven years to be fully effective, so it’s wise to start considering your options sooner rather than later.
^Source: Office for Budget Responsibility March 2018 forecast