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Showing posts with label Inheritance Tax. Show all posts
Showing posts with label Inheritance Tax. Show all posts

Wednesday, October 10, 2007

UK Inheritance Tax threshold unchanged


The Inheritance Tax announcement yesterday by "Chancellor" Darling is misleading. It has the flavour of a Gordon Brown dodge - hence my inverted commas.

The threshold per person remains at £300,000, as this article by Labour Home itself explains. What has changed is that the allowance is transferable on death, if you are married or in a civil partnership.

A similar effect would previously have been achieved by any competent solicitor, will writer or estate planner, by including a Nil Rate Band Will Trust in your Will. Similar, but not quite the same: the Nil Rate Band trust means giving assets away to a third party (not to one's partner) after the first death. Making the allowance transferable lets the surviving partner enjoy the use of assets worth up to £600,000, without the threat of estate tax afterwards.

This will reduce the amount of tax raised from IHT, since it helps those who a) haven't written the right kind of will/trust arrangement or b) couldn't do so because of the continuing needs of the surviving partner (who might, for example, be disabled or in a privately-paid nursing home).

But it's certainly not what it sounded like, which was an IHT allowance of £600,000 per person, or £1.2 million altogether.

Thanks to Dizzy Thinks and The Spectator Coffee House blog for the alerts.