The Government collected over £1.9 billion in Inheritance Tax receipts during the first four months of this tax year because thousands of people are not seeking IHT planning advice.
Statistics have shown that only 5,420 taxpaying estates were successful in claiming the Residence Nil Rate Band (RNRB) during the 2017/18 tax year.
The RNRB was introduced in April last year. It provides an additional tax break on the family home and the value of this tax break is expected to rise further over the next two years.
The RNRB is a way of allowing families to pass on their housing wealth. It applies when the property is passed on to direct descendants.
Individuals are currently able to pass on assets worth up to £325,000 (the nil rate band) when they die, anything above that incurs IHT at a rate of 40 per cent.
When it was first introduced, the RNRB offered an additional £100,000 tax-free nil-rate band when a property was passed on after death to a direct descendant.
This amount has since risen in value to £125,000 this year and will continue to increase to £175,000 by the tax year 2020/21. From then on, it will increase in line with inflation of the consumer price index.
Together, the Inheritance Tax nil-rate band and the ability to transfer any unused main residence nil-rate band to a surviving spouse or civil partner, have allowed the Government to announce there will effectively be an Inheritance Tax threshold of £1million by 2020/21.
According to the latest official figures from HM Revenue & Customs, over 24,000 estates pay inheritance tax each year.
The number of people making use of the new allowance has increased, with 3,490 taxpaying estates already claiming the RNRB, but many are still not taking advantage of the tax break due to a lack of knowledge around the matter.
Rotherham Taylor can assist with IHT planning advice, but we are also one of a small number of accountancy practices in the UK to be licensed to provide probate services by the Institute of Chartered Accountants in England and Wales (ICAEW).
This means that our team can offer a wide range of probate services to clients, from obtaining a grant of probate, to identifying and distributing assets according to the terms of a Will.
Furthermore, our existing detailed knowledge of a client’s financial affairs means that we can act quickly and effectively on probate matters with consequent cost benefits.