With thousands of us separated from families and locked down in self-isolation thoughts are likely to turn to the future and what we can do to ensure our family are cared for once we are gone.
The number of Wills being written and reviewed as a result of the coronavirus have spiked, as people take the necessary steps to ensure their wishes are met and families are supported.
As part of the process of writing or preparing a Will, it is important to consider how Inheritance Tax (IHT) may affect your estate and whether your beneficiaries could end up with a tax bill once you have passed.
At the most basic level, IHT is payable at a rate of 40 per cent on estates worth over £325,000 at the date of death (although this may be affected by certain rules and reliefs.
It can also become due on certain lifetime gifts of assets, at a reduced rate of 20 per cent.
Generally speaking, it is never too early to plan for IHT – especially if you have an estate worth more than £325,000, or £650,000 for married couples/civil partners, then it is worth exploring the options to reduce an IHT bill for your beneficiaries.
Business Property Relief or Agricultural Property Relief
Certain assets receive relief from IHT these include Business Property, Agricultural Property and Heritage Assets. These reliefs can reduce or eliminate the value of an asset being included within an estate, but they often rely on certain conditions being met.
For example, Business Property Relief (BPR) has been an established part of IHT legislation for more than 40 years.
It ensures that BPR-qualifying shares that have been owned for at least two years, they can be passed on free from IHT on the death of the shareholder. However, not every interest in a business will qualify for BPR so it is worth seeking specialist professional advice when managing your estate.