InsightsInsight - Wills and Probate - POSTED: May 28 2018
IHT has reached an all-time high
The payment of Inheritance Tax (IHT) has reached an all-time high of £5.2bn in 2017/18, an increase of £400m on the previous year, despite the introduction of the Residence Nil Rate Band (RNRB).
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The RNRB introduced a new allowance of £100,000 per person where they leave their main residence to their direct descendants i.e. children. This increased to £125,000 from 6 April 2018 and will increase to £175,000 over the coming years. The idea behind the RNRB was that couples should be able to leave £1m without any IHT becoming payable.
The RNRB is in addition to the IHT allowance of £325,000 each, which has not increased since 2009. Everything over and above the IHT allowance and RNRB is subject to IHT at 40%.
The RNRB was introduced to allow wealth to pass down to future generations without having to suffer as much IHT. However, the figures released show that booming stock markets and increasing property prices has increased the IHT being paid, rather than reduce it.
The applicability of the RNRB is not without complications and it is advisable to review your wills to ensure the RNRB can be successfully claimed by your executors on your death.
Since the figures were published, the Government has recently announced plans to change the IHT system and a review is currently being undertaken.
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