British families ignoring opportunities to reduce Inheritance Tax
Five in six British families are ignoring a recently-introduced Inheritance Tax (IHT) break which, if used, entitles each individual to an additional £125,000 tax-free allowance.
The residence nil rate band (RNRB) was first introduced in April 2017 but, as of this month, has been increased from £100,000 to £125,000.
Yet thousands of British families are missing out – either because they are not aware of the new allowance or do not fully understand what they need to do in order to take advantage.
In England and Wales, individuals do not need to pay IHT if their estate is worth £325,000 or less. However, any estates valued above this threshold will incur IHT at a rate of 40 per cent.
Under the new RNRB, anyone who wishes to pass residential property down to direct lineal descendants such as children and grandchildren can take advantage of an additional £125,000 tax-free allowance.
But according to a report in This is Money, just one in six families who have paid IHT since the RNRB was first introduced have benefited from the new allowance.
The news follows a Freedom of Information (FoI) request recently issued to HM Revenue & Customs (HMRC), which revealed that only 4,000 of some 24,000 estates that paid IHT have benefited from the RNRB.
In order to determine eligibility for the RNRB and to implement the appropriate provisions into their Wills, families are urged to contact their solicitors for specialist legal advice.