You are here: Home - Household Bills - News -

Check your will, or miss out on new IHT allowance

0
Written by:
06/10/2015
Families across Britain could miss out on a new inheritance tax (IHT) allowance if they do not review their wills, the boss of a leading financial adviser firm has warned.

In July, the government announced a new £1m allowance for couples who want to pass on property wealth, plus an extra allowance for family homes in addition to the existing tax-free band from 2017, taking the total to £1m by 2020.

However, Mike Coady, managing director of deVere United Kingdom, said many people are likely to miss out on benefitting from the new allowance.

“Over the last couple of years, reducing the burden of IHT has become an increasingly important priority for a growing number of families,” he said.

“This trend has come about for a number of reasons, but primarily because more and more people have been dragged into the IHT net due to rising house prices, a recovery of household savings, and due to the threshold at which IHT is charged being frozen.

“However, despite being keen to cut IHT liabilities, many are likely to miss out on benefitting from the government’s new allowance if they don’t review their wills – this is because, as is so often the case, the devil is in the detail.”

Discretionary trusts, the most popular trusts to minimise IHT, are exempt from the new family home allowance because the property does not pass directly to the beneficiary or beneficiaries. For the family home allowance to be used, the property must be inherited directly by descendants, such as children, stepchildren or grandchildren.

“As such, those with discretionary trusts set up by families in order to leave property to children tax efficiently could potentially be missing out on a £350,000 per couple allowance from 2020. Therefore, I would urge anyone who could be affected to review and then possibly revise their wills,” said Coady.

He added: “There are still a raft of bona fide trusts and other financial solutions, such as holding properties as ‘tenants in common’ with your spouse, investments that qualify for relief and gift allowances, that can help mitigate IHT.

“It is hardly surprising people are typically eager to reduce IHT, often described as ‘the most hated of all forms of taxation’. This is because leaving a legacy to loved ones is a very human instinct and people feel especially aggrieved by this form of IHT because it is, in effect, a form of double taxation as tax is being paid on assets which have already been paid for and previously taxed.”

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

The savings accounts paying the most interest

It’s time to get your finances in shape, and moving your cash savings to a higher paying deal is a good plac...

Everything you need to know about being furloughed

Few people had heard of ‘furlough’ before March 2020, but the coronavirus pandemic thrust the idea of bein...

The experts’ guide to sorting out your personal finances in 2021

From opting to ‘low spend’ months to imposing your own ‘cooling-off period’, industry experts reveal t...

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Having a baby and your finances: seven top tips

We’re guessing the Duchess of Cambridge won’t be fretting about maternity pay or whether she’ll still be...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

Money Tips of the Week