v THE NEXT HERALD IS OUT ON 4TH AUGUST v 14th July 2022 • The HERALD • Page 63 ASK A PROFESSIONAL RUNDOWN ON INHERITANCE TAX by Lindsay Taylor, Senior Associate Solicitor, CGM Solicitors With in ation at a 13 year high at the writing of this article I have noticed an uptick in client concerns about inheritance tax on death. is is a brief rundown on the main aspects which apply to most estates. When someone dies inheritance tax is payable on the value of their chargeable estate that passes to bene ciaries that are not exempt for inheritance tax purposes. Anything passing to spouse or charity is exempt. What passes to bene ciaries that are not exempt for inheritance tax purposes is currently chargeable at the rate of 40% over and above the sum of the nil rate band which presently stands at £325,000. Your estate comprises the value of everything you own although there are a number of reliefs from inheritance tax based on the nature of the asset involved and the most common relate to certain business property, agricultural property and woodland. e estate may also include the value of potentially exempt transfers where you do not survive for the requisite period of seven years from the date of the making of the gi . Should you make a gi of an asset, but retain use of it the 7 years will only start to run from the date you cease to get any bene t from it if at all. You can now also make gi s out of your income provided that you are still able to maintain the same lifestyle from the income remaining. e rules concerning this are complex and detailed records must be kept of the year’s income out of which the gi is made. Do also remember that most life policies can be put on trust to ensure that what is paid out on death is not included in the value of your estate for inheritance tax purposes. ere is no tax payable on gi s to spouse, civil partners or charities and it is now also possible for any nil rate band unused in the estate of the rst to die to be used in the estate of the second to die and at the upli ed nil rate band gure at the date of second death. As the law stands at present therefore a maximum £650,000 may be available in the estate of the second to die. If you have an ISA, you may be aware that your spouse/civil partner can inherit this allowance on your death. You should be careful to ensure that if you wish your spouse/ civil partner to bene t from this, that you leave the ISA account direct to them whether as a legacy or as part of your residue. As of the 6th April 2017 a new Residence Nil Rate Band allowance (RNRB) is available to those with property leaving it directly to children. is is £175,000 per person. On the second death your executors may be able to utilise RNRB of the rst to die provided you are married or in a civil partnership. Should you have placed your property into a trust, you should ask your solicitor for advice as your estate may not qualify for the RNRB. If you leave a share of your property (or it falls into your residue) to a child and limit the age of inheritance above 18 (such as 21 or 25) the RNRB may be lost in part or full. ere are ways to save the RNRB but you should carefully balance the outcomes with your solicitor. Lindsay Taylor is a Senior Associate Solicitor based at the Hythe O ce. For your conveyancing and private client needs you can contact CGM Solicitors on 023 8084 2765 for an appointment. Lindsay Taylor, Senior Associate Solicitor, CGM Solicitors For Good Advice Ask Your Local Experts
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