In his Autumn Statement yesterday morning, Jeremy Hunt announced that the inheritance tax threshold is to be frozen at £325,000 until 2028. This threshold, referred to as the ‘nil-rate band’, is the amount of your estate which can be passed on to your beneficiaries free from inheritance tax (IHT). Anything over this threshold is then subject to the IHT rate of 40%.
In addition to the nil-rate band, you may be entitled to receive an extra £175,000 tax free allowance if you leave your family home to your children or grandchildren, which is referred to as the ‘residence nil-rate band’. However, with the ever-rising housing market, the value of your family home may still push you over the combined £500,000 threshold for IHT purposes.
The £325,000 threshold for the nil-rate band has been in place since 2009 and has failed to keep pace with inflation and the housing market. With this threshold to be frozen until 2028, it is expected that many families will not be able to leave their loved ones as much as originally planned, with an increase in the number of IHT chargeable estates being predicted.
If this resonates with you and would like to discuss estate planning with one of our solicitors, please contact our offices on 01295 204000 and we can discuss how to protect your estate for your loved ones.
While £325,000 may sound a lot, those who own property are likely to find they are close to, or exceed this limit, and may not be able to leave their loved ones as much as they’d hoped when the time comeshttps://www.ftadviser.com/your-industry/2022/11/17/income-tax-bands-frozen-until-2028/