Yet again, no changes to the Inheritance Tax Nil Rate Bands were announced following the most recent budget.

So, it seems an appropriate time to revisit my previous article about Inheritance Tax.

Everyone wants to save on inheritance tax.

And if you have an old Will, updating it could save your beneficiaries a considerable sum.

This article will explore how.

How Much Inheritance Tax Will Be Paid When I Die?

This is the ultimate question and one we hear the most at Monan Gozett.

Let’s break down how inheritance tax is calculated.

Firstly, anything left to a spouse or charity is exempt.

After that, inheritance tax is charged at 40% above your Nil Rate Band.

A reduced Inheritance Tax rate of 36% applies if you leave more than 10% of your estate to charity.

What Is Your Maximum Nil Rate Band?

This is a very complex area, but the basics are:

• Individual without children or grandchildren: £325,000.
• Individual with children or grandchildren: £500,000.
• Married couple/Civil Partners without children or grandchildren: £650,000.
• Married couple/Civil Partners with children or grandchildren: £1million.

Prior to 2017, the maximum Nil Rate Band was £325,000 for an individual and £650,000 for a married couple.

However, until late 2007, the maximum Nil Rate for an individual or a married couple was only £325,000.

Before October 2007, the main way for a married couple to save Inheritance Tax was to create Nil Rate Band Discretionary Trusts in their Wills.

However, the 2017 changes that increased the Nil Rate Band for a married couple from £650,000 to £1million only allows that increase of £350,000 if your home is given outright to your children or grandchildren when you die.

This means that if your Wills contain a Nil Rate Band Discretionary Trust, you are likely to miss out on that £350,000.

Your estate will, therefore, pay an extra £140,000 in Inheritance Tax, so your family will inherit £140,000 less just because you never got around to updating your Wills.

Update Your Will

So, what action do you need to take?

First, locate your copy of your Will and check the date on it.

If it was made before 2008, it needs to be reviewed urgently, as your estate could be at risk of paying extra Inheritance Tax when you die.

If your Will was made before April 2017, it also needs to be reviewed, although it is less likely that changes will need to be made to save Inheritance Tax.

Second, contact our Private Client team to book a free, no obligation, initial appointment to review your Will.

I am based in our Arundel office, but free home visits are available.

During the initial appointment I will ask you for background information regarding your family and your estate, to check your Inheritance Tax position, and then review your Will in light of that to see if you need to make any changes.

You can contact me by calling Monan Gozzett LLP on 01903 927055, or by email to ssampson@monangozzett.com.

Do you have any questions about the subjects raised in this blog? Feel free to fill in the form below and we will do our best to reply to you:

If you would like to speak to our expert legal team about this, or any related subject then please contact our team by phone on 0207 936 6329, Email or by completing our Quick Contact Form below.