Under current legislation all UK based individuals are liable to pay Inheritance Tax upon their death should they own assets in excess of £325k for individuals and £650k for married couples. Everything over this figure is liable to tax at 40% and should be settled with HMRC before the residual estate can be distributed to loved ones.
In addition to the allowance of £325,000, individuals with direct descendants who have an estate (including a main residence) with total assets above the Inheritance Tax (IHT) threshold (or nil-rate band) of £325,000, are entitled to an additional nil-rate band when a residence is passed on death to a direct descendant.
This is £150,000 in tax year 2019/2020 rising to £175,000 in tax year 2020/2021
It will then increase in line with Consumer Prices Index (CPI) from 2021/2022 onwards. Any unused nil-rate band will be able to be transferred to a surviving spouse or civil partner.
Inheritance Tax is a tax payable on the estate of a deceased person however, there are various solutions to mitigate this including Gifting Assets to children, Trusts and numerous Investment solutions.
If you feel this is of concern speak to one of our experienced advisers who can discuss and offer a bespoke solution, ensuring the true value of your estate is passed onto your loved ones.