Inheritance Tax Issues
Inheritance Tax Planning
On death, your estate is subject to Inheritance Tax. Currently (for the 2009/10 tax year) the first £325,000 is taxed at 0%; this is known as the nil band rate. Following changes introduced by the Autumn 2007 budget and which are now law, where the second to die of a married couple or civil partnership passes away on or after 9th October 2007, leaving their nil band rate unused – often the case when they left everything to their spouse or civil partner, meaning the spouse exemption applied – this nil rate band can be carried forward and added to that of the survior. This gives, under current rules, a total of £650,000 to offset before IHT.
Carrying forward an unused exemption is not granted automatically; it must be claimed. Such claims can become complicated where the first to die passed away many years ago, when another tax regime applied such as estate duty. Obtain specialist advice to ensure that the maximum amount available is claimed.
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