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Inheritance Tax, commonly shortened to 'IHT', is the tax paid on assets after any allowable deductions when someone dies.
Depending on the level set for the IHT threshold, (currently no IHT is payable on the first £325,000.00 of someone’s Estate) a person’s Estate owes tax at 40% on anything above the threshold. This excludes the main residence allowance.
When someone passes away, they may not be aware that IHT can cost their loved one’s thousands of pounds. It is still possible to plan your estate so as to minimise – quite legally – the amount payable.
What is the Main Residence Band?
The Main Residence Band was only introduced in 2017/18 and is known as the residence nil rate band - shortened to RNRB. It can only be claimed on a main residence so can be taken into account when trying to calculate whether IHT is applicable.
Are there any exemptions from IHT?
Those serving in active service, such as the armed forces, police, firefighters, paramedics and humanitarian and aid workers, are exempt from paying IHT if they die in active service.
Am I exempt if married?
If a person passes away and, at the time of their death, they leave assets to a spouse or registered civil partner – then if they are living in the UK they are exempt from IHT. However, this is complex area and IHT can be payable on the death of the second person. The specialist teams at Nowell Meller will be happy to provide further advice either over the phone or face to face or sign post clients to specialist IHT Tax Planners. Please call our Stafford office on 01785 252377 or our Stoke on Trent office on 01782 813315.