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Inheritance Tax Planning at Marshall Wills and Trusts

Navigating Inheritance Tax Challenges

As property values continue to rise, inheritance tax (IHT) has become a significant concern for many estates. Under current regulations (as of 2020), each individual is entitled to a lifetime allowance of £325,000. Assets exceeding this value—including cash, savings, investments, and property—are subject to a 40% tax on the amount over the threshold at death.

For married couples, the combined allowance doubles to £650,000, with the ability for the surviving spouse to inherit any unused portion of their deceased partner's allowance.

Additional Allowances and Strategies

1- Residence Nil Rate Band (RNRB)

  • Individuals may also be eligible for an additional £175,000 each through the RNRB, provided they own and bequeath a residential home to direct descendants such as children or grandchildren.

  • This benefit applies only to the primary residence and begins to taper off for estates valued over £2 million, decreasing by £1 for every £2 above the threshold.

  • Qualifying for the RNRB can increase an individual’s allowance to £500,000, or £1 million for couples, before IHT becomes due.

2- Annual Gift Allowance