The introduction of the Residence Nil Rate Band (RNRB) applies to residential property when it is left to a direct descendant and for a married couple from 2021 £1 million of assets can be passed to children without attracting Inheritance Tax (40% above threshold).
So for the majority of readers Inheritance Tax bills will not be an issue but for those who have sizeable assets and don’t qualify for Business Relief or Agricultural Relief then the thought of paying 40% tax on death is a real headache.
The writer can think of 10 ways to avoid inheritance tax duty but for the purpose of this article is dismissing spending accumulated wealth and is concentrating on 2 areas.
40% of adults in Northern Ireland do not have a Will. Making a Will is a major part of estate planning as you can make sure your assets are distributed in accordance with your wishes. Without a Will your assets will be distributed according to intestacy rules and may be liable to IHT that could be avoided. Don’t forget that there is no IHT paid on assets inherited between spouses whilst a Deed of Variation within two years post death (morbidly called post-mortem tax planning) can vary a Will provided beneficiaries old and new are comfortable with the arrangement.
The second area where Inheritance Tax can be avoided or reduced involves charitable bequests. The more vigilant reader cannot fail to have noticed the increasing number of campaigns by charities encouraging readers to make Wills. Remember charities can never benefit from an estate if there is no Will (unless you consider the Crown as a charity!)
Anything left to a charity will be free of any IHT liability. If you leave at least 10% of your total assets to charity then the inheritance tax rate of the remaining assets will be reduced from 40% to 36%.
Current Will campaigns of late include campaigns whereby charities will pay the solicitor for preparing the Will whilst other charities encourage solicitors to suggest either a legacy on death or to make a lifetime donation.
At Worthingtons we continue to support the November Will Aid scheme which helps raise money for 9 different charities across the UK and Ireland whereby subscribing solicitors waive their usual fee and an equivalent (suggested £100 for a basic single Will or £180 for a pair of basic mirror Wills) is collected by the solicitors and forwarded to the Will Aid team.
For further information contact Huw Worthington on 02891811538 or email [email protected]
Call 028 9043 4015 or Contact us