UHY Ross Brooke Chartered Accountants

Inheritance Tax

Ben Franklin once wrote the infamous line of “in this world nothing can be said to be certain, except death and taxes” and in the UK, the tax we are most likely to associate with death is inheritance tax (IHT).

What is IHT and when do you have to pay it?

IHT is a tax charge on the capital value of assets held on death. Every taxpayer has a nil rate band (currently £325,000) and if the main home is left to a lineal descendant an additional main residence nil rate (currently £175,000) could be available, subject to tapering if the gross Estate is over £2m. Therefore, an individual could have assets up to £500,000 before any IHT will be due. Any value of assets above this would then be subject to 40% tax charge.

IHT can also be due at the lower 20% rate within the lifetime of a taxpayer on certain chargeable lifetime transfers e.g. settling assets into Trust in excess of the nil rate band. Trustees can also be subject to IHT on capital appointments and on every Ten-Year anniversary of Relevant Property Trusts. More information can be found on this on our Trust page.

Ways to reduce your IHT

When looking at IHT there are a number of lucrative reliefs, such as Business Property Relief (BPR) and Agricultural Property Relief (APR) which can give between a 50% and 100% reduction of the value of certain assets and if certain conditions are met subject to IHT. By understanding when these reliefs apply and by carefully managing any assets that could qualify, a substantial saving of IHT can be achieved.

Estate Planning

Inheritance Tax was once considered to be a tax on the wealthy. However, with the IHT nil rate band remaining unchanged since 2009 and with property values appreciating substantially over the years, more taxpayers are becoming exposed to IHT.

Unfortunately, this can pose an issue for Executors who may have to sell assets to pay the tax, thus meaning future generations will not continue to own or benefit from the family’s assets and the net inheritance they receive can be substantially reduced.

By carefully structuring lifetime gifting, maximising all available reliefs, considering Trusts and looking at your overall assets and potential investment options, there are many opportunities available to reduce your exposure to IHT on death within your lifetime.

IHT Specialist Tax Accountants

At UHY Ross Brooke we have a team of qualified and experienced tax specialists across our offices, who can provide a bespoke tax planning service, taking all taxes into consideration. We will make recommendations on how best to mitigate your current exposure in-line with current legislation but also ensure those recommendations meet your own personal desires, to allow you to confidently achieve the best course of action to protect the wealth you have built in your lifetime, to be enjoyed by future generations.

Get in touch and find out how our Inheritance tax specialists can help you.

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Meet our Senior Tax Team

Phil Kinzett-Evans crypto tax director

Phil Kinzett-Evans

Tax Director
Newbury

Joshu Pearce, Tax Manager, Crypto Tax specialist

Joshua Pearce

Senior Tax Manager
Newbury

Tom Annat, Senior tax manager, crypto tax specialist

Tom Annat

Senior Tax Manager
Abingdon

Tax manager for expert advice

Rebecca Horne-Smith

Senior Tax Manager
Hungerford

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