Almost three quarters (70 per cent) of Britons are unaware of important changes to Inheritance Tax (IHT) which could save them a lot of money if they intend to pass residential property to direct lineal descendants in their Wills.
In April 2017, new legislation known as the residence nil rate band (RNRB) was introduced, which enables individuals who seek appropriate legal advice to pass an additional £100,000 in property value to children, grandchildren, foster children or step children in their Wills, completely free of IHT.
Yet a recent study carried out by financial services firm Canada Life suggests that the majority of Britons are not only unaware of these new rules – they are also confused about the legislation governing IHT in general.
The survey, which quizzed a number of Britons aged 45 and above, found that more than two thirds of respondents with assets of more than £325,000 each were unaware that their estate was liable for an IHT bill.
It also found that more than half (55 per cent) of over-45s were not aware that IHT is levied at a rate of 40 per cent of an estate’s total value in England and Wales.
Under English law, an individual’s estate will typically incur IHT at a rate of 40 per cent if it exceeds £325,000. However, there are numerous ways that Britons can save money on IHT, such as by leaving a legacy to a charity in their Will, or by taking advantage of the RNRB. It is important to seek specialist legal advice to find out more.