Inheritance Tax Planning and the Residence Nil Rate Band
In 6 April 2017 the Residence Nil Rate Band (RNRB) was introduced. This marked the greatest change to inheritance tax (IHT) in more than 10 years. Since its introduction a major rethink of estate planning is necessary to capilatise on this valuable new relief.
At Cotswold Independent Financial Services, our personal financial experts have worked with estates of various sizes over the years, helping everyone from the self-employed and small business owners to company directors, minimise payment to HM Revenue and Customs (HMRC) and maximising how much money their loved ones and business partners receive.
How to Save on IHT Costs
1. Make a will. If you don’t have a will, your wealth will be distributed according to statutory intestacy rules, which will most likely result in higher inheritance taxes.
2. Transfer some assets while you are still able to do so. If you are married, your assets will pass to your spouse without any IHT costs, but transfers to other family members or business associates will incur inheritance tax.
3. Make regular gifts every year to friends and family members. You are able to give gifts of £250 each year, without needing to pay any amount on taxes. Wedding gifts of up to £5000 to children and £2500 to grandchildren are also tax free.
4. Donate to charity. Estates which leave 10% of their wealth to charity pay 36% less on inheritance taxes.
5. Set up a trust. A trust is a good way to ensure that your loved ones get the financial support they need, because once it is set up, the trust is exempt from inheritance tax.
Read more about it here.