Inheritance Tax & Estate Planning

We are able to give specialist tailored advice to help clients plan for the future. We have assisted many clients with tax saving techniques through the use of certain types of Wills and Trusts.

Often the type of Will or Trust used will depend on the familial and business circumstances of the client and our team have many years of experience in gauging the right option for a particular client.

When a person dies the value of their assets after payment of any liabilities (known as their estate) is assessed for Inheritance Tax.  The rate of the tax currently is 40% but there are reliefs and exemptions which can apply to the estate before any tax is assessed.  The first £325,000 of an estate is exempt and this is called the Nil Rate Band for Inheritance Tax purposes.  The estate valued over £325,000 is usually taxed then at 40%.

Any part of the estate passing to a spouse or civil partner is completely exempt from Inheritance Tax.

After April 2017 there is an additional exemption called the Residence Nil Rate Band (RNRB) whereby a further £100,000 (rising to £175,000 by 2020) can be added to the existing £325,000 nil band meaning that in April 2017 onwards at least the first £425,000 of an estate will be free of Inheritance Tax.  Needless to say there are requirements to be met for this relief to apply i.e Terms & Conditions apply.

The Inheritance Tax position of a deceased person can be very complicated and legal advice should always be sought from a specialist Probate Solicitor. 

We are able to boast the expertise of Allison Kent and Beverly Bowen who are both one of a small number of full members of the STEP (Society of Trust and Estate Practitioners). Allison and Bev both specialise in advising clients with high value estates in order to reduce and minimise any potential tax liability, with the expertise to be able to give estate planning and tax advice to agricultural and business clients.

It can also be the case that the best option for a client will not necessarily be Will or Trust based and we can also give advice on and assist with the making of lifetime gifts, for example a gift of a property to a child. In such circumstances it is important to consider the implications of making gifts and we are able to provide a client with the options available to them and the implications involved.

Residence Nil Rate Band

The normal tax relief or amount under which no Inheritance Tax is payable on death is £325,000 for an individual person. After April 2017 a new Inheritance Tax relief called the Residence Nil Rate Band (RNRB) is being introduced which will add £100,000 in 2017 (rising to £175,000 in 2020) to the existing £325,000 Inheritance Tax band.

This additional RNRB applies where a deceased leaves a residential interest in one property to a direct descendent (child, step-child, adopted child, foster child, grandchild and any other lineal descendent).

A claim has to be made for this benefit usually by the Executors and if the estate is over £2,000,000 there are provisions that reduce the relief.

All Wills entered into prior to April 2017 should be reviewed to ensure that this new relief is available under the terms of the Will.

Downsizing and the Residence Nil Rate Band

Where the deceased person has either sold their home or downsized to a less valuable residence on or after the 8th July 2015, the value of the downsized residence or the equivalent value of the original home that was sold, are still eligible for the Residence Nil Rate Band (RNRB).

Specialist advice from a Solicitor should be sought as a claim for the RNRB has to be made when making the application for Probate.

Transfer of an Unused Nil Rate Band

The situation that usually arises is that a person has died in the past leaving his whole or the majority of his estate to his or her spouse or civil partner.  When a person dies they are entitled to the first £325,000 free of Inheritance Tax.  This is called the Nil Rate Band. Any amount however passing to a spouse or civil partner is exempt from Inheritance Tax meaning that perhaps all or a major part of the Nil Rate Band of the deceased has not been used up. 

It is now possible to transfer that unused Nil Rate Band and add it to the Nil Rate Band of the spouse or civil partner who is the second to die. In most cases the effect is that the spouse or civil partner who dies second ends up with a Nil Rate Band of £650,000.

It is also possible to transfer an unused residence nil rate band for deaths after 5th April 2017, meaning that on a death after 5th April 2017, it may be possible with the use of these provisions for the spouses or civil partner who is the second to die to have a nil rate band of £850,000.00 rising to £1m by the year 2020.

These reliefs have to be claimed and specialist advice from a Probate Solicitor should be sought.


To speak to one of our experts please get in touch