Research highlighted by the media in recent days suggests that UK adults are growing increasingly wealthy and that many are expecting to pass on multi-million pound legacies when they die.
However, reports suggest that many individuals are overlooking the importance of Inheritance Tax (IHT) and the impact this will have if they pass on large estates to their children and grandchildren.
A survey of more than a thousand people carried out by financial services firm Canada Life in recent days has revealed that one in 25 UK adults are expecting to receive an estate of £1 million or more from their parents or grandparents.
Meanwhile, a further one in 50 Britons are expecting to receive an estate worth £5 million or more.
In England and Wales, IHT is payable at a rate of 40 per cent on any estates valued at higher than the current IHT threshold or ‘nil rate band’ – which has been frozen at £325,000 for many years.
However, research recently carried out by Brewin Dolphin suggests that the majority of Britons do not fully understand IHT rules and thresholds.
Following important changes to IHT first introduced in April 2017, individuals can pass on an additional £100,000 in property value to their direct lineal descendants – including children, grandchildren, step children and foster children – tax-free.
However, in order to take advantage of these new rules – known as the additional residence nil rate band (RNRB) – or any other laws which may enable a person to mitigate their IHT liability, they must seek specialist legal advice to ensure the appropriate provisions are accurately made in their Wills.
For advice on Inheritance Tax, or on making or updating a Will, please do not hesitate to contact William Rowe at William.firstname.lastname@example.org or on 01952 641651.