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Inheritance tax planning

During your lifetime you will build up wealth that you will want to leave primarily to your beneficiaries rather than HMRC.

Inheritance Tax Planning

If the value of your worldwide assets such as your home, investments, cash and any other property exceed the nil rate band (currently £325,000) you will pay inheritance tax at a rate of 40%.

For example:

value of estate £1,000,000 less £325,000 = £675,000 x 40% = £270,000. In this case HMRC would be due £270,000 and the beneficiaries, just £730,000.

Nil rate bands are now transferrable between spouses and civil partners, and further allowances can be used to reduce your estate in your lifetime. Further to this, a new Allowance, the ‘Residence Nil-Rate Band’ (or RNRB), has recently been introduced.

This new allowance will be tapered in, and a claim for the new allowance can be made for deaths occurring after 6th April 2017. If a person leaves a family home to a direct descendant, they will benefit from the RNRB as well as the ordinary nil-rate band.

The bands which will apply are as follows:

2017/18 – £100,000
2018/19 – £125,000
2019/20 – £150,000
2020/21 – £175,000

The above bands will increase in line with the Consumer Price Index from 2021 onwards.


It is possible to reduce your inheritance tax rate to 36% by making a contribution of at least 10% of your net estate to a registered charity.

Altero can help you plan the amount of inheritance tax you are willing to pay (if any).

For more information about the Inheritance tax planning options available and which ones work best for you, get in touch with us today.


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