Transferring the nil rate band
The Pre-Budget Report of 2007 introduced a welcome change that simplified the steps that need to be taken in order to avoid paying unnecessary inheritance tax (IHT). The change assists married couples and civil partners who are currently entitled to an IHT allowance or nil-rate band (NRB) of £325,000 each.
Essentially, the change allows any unused allowance on the first death to be carried forward and claimed on the second death. Therefore if, for example, a husband dies first leaving his entire estate to his wife, the total allowance that can be claimed against the wife’s estate is now £650,000. This applies to cases where the second death occurs on or after 9th October 2007 – and it does not matter how long previously the first death occurred.
Before the change, the usual method of ensuring that the allowance was fully utilised on the first death was to make a Will including a nil-rate band discretionary trust (NRBDT). This was a fairly sophisticated device adopted by more and more people to offset the IHT effects of sharply increasing property values. NRBDTs are no longer necessary to avoid IHT and although they can be brought to an end quite easily on the first death, those who currently have Wills that include them should consider whether they should be removed so as to avoid complications.
Some reasons remain for including a NRBDT, or some other form of trust, in a Will e.g. to protect part of the estate from charges for long term care or to ensure that children or other nominated beneficiaries inherit on the second death. Trusts that take in assets that qualify for IHT business or agricultural relief on the first death generally remain effective.
We are able to advise on this complex area and assist with all the necessary form filling and data collection.
"I would like to say thank you for your help, support and guidance over the last two and a half years. Obviously should I need further assistance in the future I shall not hesitate to call you guys."
-
"We were very pleased to have Jade working with us, the service was excellent and we felt kept in the loop which minimised stress."
- CT
"Approachable, very efficient, always willing to take my calls and update me."
- SH
"Jade Shelton was absolutely fantastic!! Professional and proactive at all times."
- JH
"Jade made the process of buying our first home quick, easy and took the stress out of a new chapter of our lives"
-
"Prompt, helpful, polite and very professional service."
-
"This is by far the go-to firm for any issues. You are made to feel valued from the outset and they are so confident in what they do. Wouldn't recommend any other. Thank you Hugh and Max."
- Ros Jones
"The ease that we could access and speak to Pat Smith - Thank you"
-