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RECORD INHERITANCE TAX (IHT) RECEIPTS HIGHLIGHT HOW MANY ARE MISSING OUT ON CHANCE TO SAVE TAX
Many families will pay thousands of pounds more in Inheritance Tax (IHT) if they fail to take advantage of new and increasing allowances, according to Crowe UK.
Nick Latimer, tax partner in the Cheltenham office of the national audit, tax, advisory and risk firm, was commenting after news that death duties in the UK hit £5.2 billion for the 2017-2018 tax year, the highest figure on record.
The surge in IHT receipts occurred despite the introduction in April 2017 of a Residence Nil-Rate Band (RNRB).
Nick Latimer said: “The government’s current plans provide for allowances to increase each year until 2020, when it will be possible for married couples and civil partners to pass on an inheritance of up to £1 million tax-free.”
He pointed out this should mean that future IHT receipts will decrease, but only if people take advantage of the new allowances.
“Many may be unware they exist, and they are extremely complex. As just one example, to benefit from the RNRB, a qualifying residence must pass on to direct descendants such as children and grandchildren, as passing on the residence to other relatives – such as siblings – means that the additional allowance will not apply.
“In addition, many Wills contain Discretionary Trusts which will not automatically qualify for the new Inheritance Tax relief.”
This and other complications concerning assets that may or may not qualify for IHT relief mean that families should seek advice from specialist tax advisors.
“The government has already acknowledged, via the UK Treasury, that IHT is incredibly complex and it has asked the Office of Tax Simplification (OTS) to undertake a review.
“However, in the meantime, families could save enormous sums of money by taking specialist advice on legitimate steps to minimise their exposure to IHT.”