In October, Labour introduced several reforms to Inheritance Tax (IHT), including:
- Extending the freeze on nil-rate bands until 20300
- Subjecting pensions to IHT from 2027
- Adjusting Business and Agricultural Reliefs
Reviewing your estate plan now could help you navigate these reforms.
With the nil-rate bands frozen, it’s important to maximise tax efficiency.
An additional allowance called the “residence nil-rate band’ offers up to £175,000 in IHT relief if you leave your primary residence to direct descendants.
Combined with the regular nil-rate bands, these allowances enable yo to pass on up to £500,000 tax-free and up to £1 million if you’re married.
Giving gifts while you’re alive could be tax-efficient
Giving gifts while you’re alive can be an effective way of reducing your IHT liability.
Each tax year, you have a “annual exemption” that allows you to give gifts up to a certain amount without the value being added to your estate.
Assets held in trusts will usually still be exempt from IHT
Assets placed in trust are generally no longer considered part of your estate for IHT purposes, provided the transfer meets specific conditions.
It’s a good idea to consult a financial planner before establishing one.
Perennial Wealth are Independent Financial Advisers who specialise in retirement planning and estate planning.
Get in touch
If you would like a review of your pensions and investments and whether yo are on track to achieve your financial goals, please contact them for a free consultation:
Tel: 0117 959 6499
Email: info@perennialwealth.co.uk
Web: perennialwealth.co.uk
Address: Trym Lodge, 1 Henbury Road, Bristol BS9 3HQ
