Financial services company NFU Mutual has reported that there
could be a rise to almost 500,000 millionaires in the UK this year
based on HMRC data. This growth in wealth will push more people
into the Inheritance Tax bracket whilst the Nil Rate Band for tax
remains frozen at £325,000 until 2021. As a result,
Inheritance Tax planning is becoming a major issue for more and
more people in this country.
Tax payers will benefit (so long as they are married) from the
new Inheritance Tax Free Allowance for family homes, being
introduced from April 2017. This will amount to £100,000 per
tax payer (i.e. £200,000 for a couple) rising to
£175,000 in 2020, on top of the Nil Rate Band of
This new allowance is, of course, the much lauded increase of
Inheritance Tax allowance to £1,000,000 promised by the
former Prime Minster David Cameron but it may not be as generous as
it looks to some. First, the allowance is withdrawn by £1 for
every £2 by which the combined value of a couple's estate
exceeds £2,000,000. Accordingly, if your estate exceeds
£2,700,000 the enhanced Nil Rate Band allowance will not be
available at all and your combined husband and wife allowance will
be reduced to £650,000, although this can be mitigated by
Second, the allowance is only available on legacies to direct
lineal descendants, meaning childless couples will not have the
benefit of an increased allowance.
Third, individuals who are making use of Trusts to protect
assets for the benefit of their children need to think very
carefully, as unless the Trusts are skilfully drawn, Wills leaving
assets in Trust may also cause tax payers to lose the enhanced Nil
Rate Band. Of course this is an extremely complex area of new law
and it is very easy unknowingly to lose the benefit of what at
first appears to be a very generous allowance.
To ensure you keep up with changes in the law and know how to
protect your wealth for future generations, reserve your place at
our free Wealth Management Event on 2 March 2017
by contacting Melissa Baxter on t: 0118 912 0210 or e: email@example.com.
Clifton Ingram's events are usually oversubscribed so please
contact us early to avoid disappointment.
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The personal representatives, who are responsible for administering the estate of someone who has died, generally require a Grant of Representation to allow them to collect in, sell and distribute the deceased's assets.
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