25 September 2015

Don't Miss Out on the new Inheritance Tax Allowance

The Summer Budget introduced the extended Inheritance Tax (IHT) allowance which included the family home in the IHT allowance (or "nil rate band"). In the best case, a couple could have an IHT allowance of £1m. See my previous blog on the subject -  Summer Budget - Inheritance Tax 

But some previous planning could mean you lose out.

The extended allowance (the "family home allowance") only applies if the property is left to "direct descendants". But many people have done IHT planning which resulted in changing the ownership of the home from "joint" to "tenants in common", and at the same time changing the Wills to leave half of the property value to a discretionary trust on the first death. 

That may have been good planning at the time, but since the property is not being left to "direct descendants" (even if they are the intended beneficiaries of the trust) the new allowance will not be available.

If you have previously made such arrangements (typically prior to 2007 when other things changed), then it is definitely worth reviewing your estate planning.

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