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DAY 8 BONUS DAY... RESIDENCE NIL RATE BAND....
The Residence Nil Rate Band was introduced earlier this year, as a new allowance for passing on the family home.
For those that wish to leave their family home to their children or grandchildren, the allowance could further reduce the Inheritance Tax (IHT) liability quite significantly.
The Residence Nil Rate Band allowance is currently £100,000 per person and will increase by £25,000 each year until it reaches a maximum of £175,000.
This additional allowance can be transferred between spouses upon death and is in addition to the current standard Inheritance Tax allowance of £325,000 per person.
To see how the Residence Nil Rate Band may work, please see below an example....
ASSETS VALUE
Family Home £750,000.00
Cash or Investments £210,000.00
Misc Assets £300,000.00
Total Value of Estate £1,260,000.00
------------------------------------------------------------
Less IHT Nil Rate Band
Spouse 1... £325,000.00
Less IHT Nil Rate Band
Spouse 2... £325,000.00
Less both spouses
Residence Nil Rate Band £200,000.00
Value of estate to be
charged 40% Inheritance Tax £410,000.00
Total Inheritance Tax Bill
to be paid... £164,000.00
By using Mrs Cranfords and her deceased spouses Residence Nil Rate Band Combined, this has reduced the taxable amount of the estate by £200,000.
This in turn has reduced the Inheritance Tax Bill to be paid by £80,000 🙂
DAY 7 of 7 PLANNING FOR INHERITANCE TAX (IHT) EARLY....
Not everyone will have to pay Inheritance Tax as it all depends on the value of the estate, including all assets, both personal and property.
Currently the threshold is £325,000 per person, meaning if you or your spouse passes away, either party can claim the others nil rate band allowance of £325,000, meaning a total of £650,000 will be free of IHT.
For those estates above either £325,000 for an individual or £650,000 for couples, estimated tax of 40% is payable for the amounts excess of the above value of your estate, including all assets.
Clearly this is a significant amount of money to lose out of the estate and it is important to prepare in the best way you can to mitigate or minimise the amount of tax you and your family will eventually pay...
Whilst ANJ Consultants UK are not Inheritance Tax specialists, our collaborative partners who do specialise in these areas are often able to reduce your family's Inheritance Tax liabilities in the future, meaning more would go to your children and grandchildren and less to the Government.
Following even just some of the steps discussed here will help you rest more easily knowing you, your family nd your proeprty and assets are protected against future events...
If you wish to discuss any of the 7 areas that we have discussed over this short few days, please do not hesitate to contact us at ANJ Consultants UK... www.anjconsultantsuk.co.uk/
🙂
DAY 6 OF 7 UNDERSTAND HOW PROBATE WORKS AND THE FEES SOLICITORS CHARGE...
For those of you who don't know the word "Probate" is Latin for proving the Will and is a term used when discussing the administrative process that takes place when a person passes away.
Sometimes this process can take years to resolve and result in a percentage of the Estate (fee) being taken by the acting solicitor.
If you instruct a bank, a solicitor or other professional Executor to handle the financial affairs of yours, or families estate to manage the process, these fees can be huge and sometimes 6-8% or more of the total value.
Because of these huge charges, the Beneficiaries of yours, or your families estate suddenly find they have to sell a significant part of the estate (such as your home) in order to pay these fees.
In contrast, we at ANJ Consultants UK have good leverage with a number of well respected partners, where Probate Fees are considerably lower and agreed in advance so that there are no nasty surprises for your family when the time comes.
For more information, please contact us at www.anjconsultantsuk.co.uk/ where we will be delighted to guide you and point you in the right direction....
Tomorrow in DAY 7 of 7, we will discuss planning for Inheritance Tax (IHT) Early... 🙂