Inheritance Tax is a tax on the property, money and possessions of someone who’s died and, after the Chancellor froze the threshold at which people pay it in his 2021 Spring Budget, concerns were growing that he was getting ready to make further changes to pay for the COVID-19 pandemic. That hasn’t happened, Yet. Currently, Inheritance Tax must be paid if the entire value of someone’s assets exceeds £325,000, with the levy charged only on the part above this cut-off. This threshold increases by an additional £175,000 allowance per person if an individual is leaving their main home to children or grandchildren. There are things people can do now to make sure their loved ones pay less in tax when they pass away

• Make a will – First and foremost to benefit from the £175,000 allowance that can be used when leaving the main residence to children or grandchildren, Britons need to make a will.
• Spend more money – An easy way to avoid paying IHT is to not get caught out in the first place.
• Sell assets or downsize – Selling the main residence could benefit people
• Gifting while alive – People can give gifts of up to £3,000 per year and carry any unused annual exemption forward for one year. They can also make small gifts to the value of £250 for each child per annum.
• Put pensions and protections in trusts – Pensions can play a big role in estate planning, as they aren’t included when Inheritance Tax is calculated.
• Consider leaving money to charity – in some cases leaving money to charity could reduce someone’s IHT.

As ever, talk to your financial adviser.

Past performance is not a reliable guide to the future. The value of investments and the income from them can go down as well as up. The value of tax reliefs depend upon individual circumstances and tax rules may change. The FCA does not regulate tax advice. This newsletter is provided strictly for general consideration only and is based on our understanding of law and HM Revenue & Customs practice as of November 2021 and the contents of the Finance Bill. No action must be taken or refrained from based on its contents alone. Accordingly, no responsibility can be assumed for any loss occasioned in connection with the content hereof and any such action or inaction. Professional advice is necessary for every case.