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IHT is levied on the net value of your assets at a rate of 40% over a certain threshold known as the Nil Rate Band, currently £325,000 in 2018-19, and due to remain at the same level until 2020-21.
From October 2007 the NRB has been transferrable between married couples and between civil partners. Thus, a married couple have an allowance of £650,000 against Inheritance Tax, whilst a single person’s allowance remains at £325,000.
In April 2017, an additional Residence Nil-Rate Band (RNRB) was introduced giving an additional £100,000 allowance, rising by £25,000 each tax year to £175,000 in 2020-21, for certain estates where property is passed to direct descendants.
There are a number of gifts and investments you can make during your lifetime to limit your exposure to IHT. Some people will also look to use a trust mechanism in order to reduce their Inheritance Tax exposure. Please contact us if you would like free advice on your potential Inheritance Tax liability.