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Inheritance Tax Updates


Inheritance Tax, commonly abbreviated to IHT, is charged at 40% and could to be due from an estate when someone dies, and the estate is not left to a spouse or civil partner. However, there are several tax reliefs and vital planning points to keep in mind. There is usually scope to significantly reduce a taxpayer’s IHT liability, proven that appropriate and timely action is taken.

The nil rate band removes the first £325,000 from IHT. Furthermore, on April 6th 2017 HMRC introduced a new nil band rate named ‘Residence Nil Rate Band’ (RNRB), this is used to ensure that family homes can be passed to direct descendants more easily upon death. Please see the below table explaining the rates RNRB is to be phased in.

Year of death Nil band rate
2017/18 £100,000
2018/19 £125,000
2019/20 £150,000
2020/21 £175,000

There are several conditions that must be met to obtain the RNRB, which may include re-drafting an existing will.

In order to help executors meet these conditions, HMRC have begun providing an online form to notify them of the value of an estate. This form can be used to replace the paper IHT205 form. This form is intended for use by personal representatives of the deceased, or people applying for a grant of representation, such as probate. It is also for use in circumstances where no IHT is likely to be payable.

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