Patrick Brennan and Kate Hooper, in our leading Probate, Tax & Trusts team, highlight the amount of Inheritance Tax (IHT) being paid by Estates in Reading.
Figures released by HM Revenue & Customs (HMRC) have revealed that Reading sits in the top ten of inheritance tax ‘hotspots’ across the UK.
In 2015-16, 416 Estates in Reading were subject to an Inheritance Tax charge of (on average) £181,356, leading to a total of over £75 million being paid to HMRC. Reading had the eighth highest number of Estates subject to Inheritance Tax, behind seven other regions, all in London and the South-East. Guildford landed the top spot as the IHT capital of the South East, with 658 paying a total of over £162 million to HMRC. At the other end of the scale, just 31 Estates in the Wigan area were liable to IHT.
To be liable for IHT, an Estate must exceed the Nil-Rate Band of £325,000. If an Estate passes to a surviving Spouse, it may benefit from transferred allowances, which may increasing the tax free amount, up to a maximum of £650,000. A further Residence Nil-Rate Band (currently £150,000) provides further tax reliefs on your main residence provided that it passes to direct descendants. Whilst the Residence Nil-Rate Band has been brought in and increased over the past few years, there has been criticism that the Nil-Rate Band allowance has remained unchanged since 2009.
Though it is worth noting that most Estates are not taxable and fall under the IHT bracket, with the increase in house prices in the past couple of decades, even the moderately wealthy may face their Estates becoming subject to Inheritance Tax. Those that are concerned about paying death duties may wish to mitigate their IHT position with lifetime tax planning, such as placing assets into Trust, ‘ring-fencing’ their assets or gifting to charity.
It is therefore vital to keep your Wills under constant review and to seek proper advice regarding tax planning if you are concerned about your IHT positon. Our expert Probate, Tax & Trusts team is able to advise you on ways to try and combat a potential Inheritance Tax charge on your Estate.
For further information or legal advice, please contact email@example.com or call 0118 951 6800.
This article is intended for the use of clients and other interested parties. The information contained in it is believed to be correct at the date of publication, but it is necessarily of a brief and general nature and should not be relied upon as a substitute for specific professional advice.