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Estate planning update
HM Revenue & Customs (HMRC) published its annual statistics on Inheritance Tax (IHT) in late July, revealing that IHT payments in the 2020-21 tax year totalled £5.4bn, up around £0.2bn (almost 4%) on the previous year, when receipts were slightly lower than 2018-19. Typically, more than 20,000 deceased estates a year are subject to an IHT charge.
The figures reveal that there has been a reduction in the number of estates affected in recent years, which HMRC believes is due to the phased introduction of the residence nil-rate band, which can allow the estates of married couples and civil partners to receive a total £1m nil-rate IHT band. A transferable nil-rate also assists this outcome, as it is possible to transfer any unused IHT allowance on death to a surviving spouse.
Estate planning can help to keep an estate out of the clutches of IHT or at least reduce the amount of tax payable, by taking simple steps such as making lifetime gifts, through to more complex trust arrangements. It is a specialist area, particularly with the possibility of a revised IHT regime being introduced, so professional input is advisable.
It is important to take professional advice before making any decision relating to your personal finances. Information within this document is based on our current understanding and can be subject to change without notice and the accuracy and completeness of the information cannot be guaranteed. It does not provide individual tailored investment advice and is for guidance only. Some rules may vary in different parts of the UK. We cannot assume legal liability for any errors or omissions it might contain. Levels and bases of, and reliefs from, taxation are those currently applying or proposed and are subject to change; their value depends on the individual circumstances of the investor. No part of this document may be reproduced in any manner without prior permission.
The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated. If you withdraw from an investment in the early years, you may not get back the full amount you invested. Changes in the rates of exchange may have an adverse effect on the value or price of an investment in sterling terms if it is denominated in a foreign currency.
Information is based on our understanding of taxation legislation and regulations. Any levels and bases of, and reliefs from, taxation are subject to change.
Tax treatment is based on individual circumstances and may be subject to change in the future.
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