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Keep it in the family 
There are 2.86m widows and 800,000 widowers in England, Scotland and Wales who could all benefit from increased IHT allowances due to the changes in the rules made by Chancellor Alistair Darling in his October 2007 Pre-Budget statement.
In this current tax year everyone has a £300,000 IHT allowance. Anything you leave over and above that value attracts a 40 per cent IHT bill. In the past husbands and wives or more recently civil registered partnerships have been able to inherit all their partner's assets without being liable to IHT. However, when the second partner died, the tax was liable on everything above the allowance or nil rate band, as it is known. The changes mean that in addition to the free transfer, any unused allowances on the first death now also pass to the other partner. So if the first partner dies and leaves everything to the other one, there will currently be a double allowance (£600,000) at the time of the second death. The rule change retrospectively permits all widows and widowers to claim no matter when their partner died. The calculation is based on the percentage of the allowance used at the time of the first death and is applied to the allowance at the time of the second death. If you require any further information about the services that we provide or would like to review your financial planning position, please contact us |