One of the UK’s leading tax practices Grunberg & Co is reminding families and individuals not to neglect the importance of Inheritance Tax (IHT) planning.
Last year HM Revenue & Customs (HMRC) collected more than £5.4 billion in IHT from individuals, a figure which has been steadily rising year-on-year.
In light of this, the experts at Grunberg & Co, who specialise in estate planning and other tax advice are calling on families to seek specialist advice to take advantage of the various reliefs on offer.
Chief amongst these is the residence nil rate band (RNRB) – an additional tax-free IHT allowance available to individuals and families who wish to pass property to their direct lineal descendants in their Wills.
The RNRB was increased from £125,000 to £150,000 in April 2019 and will increase again in April 2020 to £175,000.
Peter McMahon, Tax Partner at Grunberg & Co, said: “Individuals in England and Wales will normally incur IHT at a rate of 40 per cent on all estates valued at above £325,000. But by taking advantage of the RNRB, individuals can effectively increase this tax-free threshold to £475,000 if they intend to pass on property to children or grandchildren in their Wills.
“The new changes to the RNRB are even better news for married couples and those who are in a civil partnership.
“This is because such individuals can combine their allowances – meaning that couples can now effectively pass on £950,000 worth of property to their children completely tax-free at the moment, just as long as they seek appropriate advice first to make sure the correct provisions have been made.”
However, Peter said that the rises next year meant that wealth of up to £1 million could be passed to the next generation, as long as it was passed to direct descendants and included property inside the rules of the RNRB.
“A full review of IHT was recently carried out by the Office for Tax Simplification, which made several suggestions on how to modernise IHT, but it is not yet clear whether the Government will carry these out,” Peter said.
“It is therefore essential that families plan around the current rules and make the most of the reliefs on offer. This process should be continually reviewed as and when a person’s circumstances change to make sure as little of their estate is impacted by IHT as possible.”
Earlier this year Grunberg & Co was named the Best Single Office Tax Practice in the UK at the Tolley’s Taxation Awards based on their expertise in advising clients on IHT and other personal taxes.
To find out more about the firm’s award-winning tax services, please visit www.grunberg.co.uk