Commonly dubbed as Britain’s most hated tax, Inheritance Tax is only currently payable on around 4% of estates. The value of an estate above the inheritance tax threshold is charged at 40% when people die. In her Autumn Budget 2024, Rachel Reeves announced the thresholds are to be frozen until at least 2030.
With the continuing rise in house prices, and unspent pensions now set to form part of the estate from 2027, it is estimated that double the number of estates will now become chargeable. Will it affect you?
- An individual’s estate will only become taxable if it worth over £325,000.00. This can double to £650,000 for married couples or civil partners, where the first to pass away has not used their individual allowance.
- The residence nil rate band increases the threshold by up to £175,000.00 for those individuals leaving their home to direct descendants (i.e. children whether step or adopted, and grandchildren etc) and can also be inherited by a surviving spouse. This uplift gives a potential boost of £350,000.00 and creates a maximum joint inheritance tax threshold of £1 million.
- If couples are not married or an estate is worth more than £2 million, this allowance can be reduced significantly.
To ensure efficient tax planning on your death, a Will is essential.
If you would like to discuss any tax planning queries or would like to make a Will, the team at Wrigley Claydon will be happy to help. Please call Rachel Damianou, Jyoti Patel, or Eleanor Heap on 0161 624 6811 (option 3) or RLD@wrigleyclaydon.com.
