The Edwin Coe Private Client team comment that it is not so long ago that Inheritance Tax was described as a voluntary tax because most people were not affected by it or could take steps to avoid it. That situation is changing especially for home owners in London where the average price continues to rise, fuelled by a flood of purchasers from abroad.
Until recently it was thought that the transferable nil rate band – which gives husband and wife a combined tax free allowance of £650k – would mean that most people were still outside the Inheritance Tax net. Recently released figures show that this is not the case.
For the first time in 5 years, Inheritance Tax in the year to April 2013 exceeded £3bn.
The government’s response to the previous administration making the nil rate band transferable has been to freeze the nil rate band itself until 2019. Well advised clients were always able to make use of the double nil rate band because it was common to have a nil rate band discretionary trust included in the Wills of couples. Rising house prices and the freezing of the nil rate band have combined to make the take from inheritance tax rise for the last 3 years.
This process is not inevitable. Our Private Client department can advise clients on how to further mitigate this tax without it being necessary to become involved in expensive schemes.
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