Latest news with #estates
Daily Mail
22-07-2025
- Business
- Daily Mail
A tenth of families paying inheritance tax hit with £500K-plus bills
More families are being stung by inheritance tax , with nearly one in 10 of those paying the levy now being handed a bill of more than half a million pounds. A Freedom of Information request by Rathbones shows that 2,520 estates paid more than £500,000 in IHT in the 2021-22 tax year, a 29 per cent increase over three years. Of the nearly 30,000 estates eligible for the death tax, 1,630 paid between £500,000 and £999,999 in IHT, while a further 890 estates paid over £1million. If the current trajectory continues, over 3,524 estates will pay more than £500,000 in IHT by the end of the current tax year, based on an average increase of 8.74 per cent a year, according to Rathbones. Frozen thresholds combined with rising asset prices, including the value of homes, investments and savings, are already dragging more into death duties. Who pays inheritance tax? Currently, your estate needs to be worth more than £325,000 for your loved ones to have to stump up inheritance tax. This can be doubled to £650,000, jointly, for married couples or civil partners who have not already used up any of their individual allowances. A further crucial allowance, the residence nil rate band, increases the threshold by £175,000 each for those who leave their home to direct descendants, their children, grandchildren or great-grandchildren. Of these, 7,270 paid between £100,000 and £249,000, but the majority of estates paid up between £0 and £100,000. Rebecca Williams, divisional lead of financial planning at Rathbones said: 'The deep freeze on both the main nil-rate band and the residence nil-rate band, unchanged since 2009 and 2017 respectively, has led to a creeping form of fiscal drag. 'As house prices and asset values have steadily risen, more estates are being brought into the IHT net simply because the thresholds haven't kept pace with inflation . 'Without proactive steps, more estates will find themselves facing IHT bills they might not have anticipated.' There are growing concerns that the Chancellor could make further changes to IHT, including extending the seven-year gifting rule to ten years, which could drag more people into the tax net. Currently, no tax is due on any gifts you give if you then live for another seven years.
Daily Mail
22-07-2025
- Business
- Daily Mail
Nearly 1 in 10 inheritance tax-paying families handed a half a MILLION pound bill
More families are being stung by inheritance tax, with nearly one in 10 of those paying the levy now being handed a bill of more than half a million pounds. A Freedom of Information request by Rathbones shows that 2,520 estates paid more than £500,000 in IHT in the 2021-22 tax year, a 29 per cent increase over three years. Of the nearly 30,000 estates eligible for the death tax, 1,630 paid between £500,000 and £999,999 in IHT, while a further 890 estates paid over £1million. If the current trajectory continues, over 3,524 estates will pay more than £500,000 in IHT by the end of the current tax year, based on an average increase of 8.74 per cent a year, according to Rathbones. Frozen thresholds combined with rising asset prices, including the value of homes, investments and savings, are already dragging more into death duties. The number of families affected is only set to rise as pensions are brought within the IHT scope from April 2027 and especially if thresholds remain frozen. Who pays inheritance tax? Currently, your estate needs to be worth more than £325,000 for your loved ones to have to stump up inheritance tax. This can be doubled to £650,000, jointly, for married couples or civil partners who have not already used up any of their individual allowances. A further crucial allowance, the residence nil rate band, increases the threshold by £175,000 each for those who leave their home to their children, grandchildren or great-grandchildren. This gives a total potential boost of £350,000 and creates a potential maximum joint inheritance tax-free total of £1million. In 2021-22, approximately 39 per cent of estates with an IHT liability paid between £100,000 and £499,999. Of these, 7,270 paid between £100,000 and £249,000, but the majority of estates paid up between £0 and £100,000. Rebecca Williams, divisional lead of financial planning at Rathbones said: 'The deep freeze on both the main nil-rate band and the residence nil-rate band, unchanged since 2009 and 2017 respectively, has led to a creeping form of fiscal drag. 'As house prices and asset values have steadily risen, more estates are being brought into the IHT net simply because the thresholds haven't kept pace with inflation. 'Without proactive steps, more estates will find themselves facing IHT bills they might not have anticipated.' There are growing concerns that the Chancellor could make further changes to IHT, including extending the seven-year gifting rule to ten years, which could drag more people into the tax net. Currently, no tax is due on any gifts you give if you then live for another seven years.
Times
22-05-2025
- Business
- Times
At last, a proposal to overhaul 188-year-old wills legislation
Death and taxes may be the two certainties in human existence — but legal strife is a subcategory that is rapidly attaching itself to the former. Battles over wills and inheritance are rolling before the courts in growing numbers as a boom in property prices over the past 30 years has significantly increased the value of previously modest estates. Within the past few months alone, this newspaper has reported on a court row between an alternative therapist who specialised in energy wavelength treatments and her sisters over their inheritance and two emotional support dogs, and another between an electrician and his sister over a £700,000 estate where a video showed the sister 'propelling' their mother's hand to sign a deathbed will. The wealthy
Telegraph
07-05-2025
- Business
- Telegraph
The ultimate inheritance tax break used by just 2pc of people
Have you been dragged into paying inheritance tax? Get in touch: money@ Families are missing out on a lucrative tax break which could cut their inheritance tax bills by tens of thousands of pounds, data suggests. The 'gifts out of surplus income' rule allows individuals to give away money without falling foul of the seven-year inheritance tax rule. However, just 480 estates benefited from the tax break in 2021-2022, figures shared by HM Revenue & Customs (HMRC) under Freedom of Information revealed. This represented just 1.7pc of the 27,800 estates which paid inheritance tax that year. In 2020-2021, 510 estates claimed the relief – or 1.9pc – compared to 500 the year before. As Labour gears up to levy inheritance taxes on pension pots from April 2027, experts said that the little-known relief could become much more popular. Inheritance tax is charged at 40pc on the value of an estate worth more than £325,000. Homeowners get an additional £175,000 allowance, and couples can share their allowance, raising the limit to £1m. Any gift made more than seven years before death is exempt from inheritance tax automatically. Taxpayers also have a £3,000 annual gift allowance – which is designed to cover events including birthdays and religious holidays. But the surplus income rules mean that if families can prove that there were regular payments – which did not have a negative effect on the giver's normal finances – then that money is also exempt. Giving an annual £10,000 gift towards mortgage repayments or private school fees, for seven years could reduce an inheritance tax bill by £26,8000, analysis by investment platform Interactive Investor found. Rachael Griffin, tax and financial planning expert at Quilter, which submitted the information request, said: 'Given the upcoming pension tax changes in 2027, we expect to see a sharp increase in the use of this exemption as more people look for ways to mitigate inheritance tax liabilities.' But Ms Griffin warned that claiming the exemption is not as simple as just handing over cash to relatives without keeping track. She said: 'However, good record-keeping is absolutely essential. HMRC requires clear documentation proving that gifts were made from surplus income rather than capital, and that they do not reduce the donor's standard of living.' Tom Selby, of online platform AJ Bell, said: 'It is inevitable and entirely logical that as the number of households being pulled into inheritance tax increases, the number of people aiming to take advantage of gift rules to minimise the tax bills faced by their beneficiaries will rise. 'There is already evidence of savers taking action ahead of this proposed change in 2027.' Rachel Reeves announced in her inaugural Budget last October that pensions would be subject to inheritance tax from April 2027. Steven Cameron, of pension provider Aegon, said: 'This approach can also be followed if an individual can show they have surplus income from their pension once in payment although this is likely to be feasible for only a very small number of individuals. Mr Cameron said anyone looking to take advantage of the tax relief should seek professional advice, as 'there are many rules to follow here'. The Office for Budget Responsibility expects that 9.7pc of estates will pay inheritance tax by 2029-2030 as a result of Ms Reeves's changes, up from 4pc currently. Bereaved families paid a record-breaking £8.2bn in inheritance tax last year, ahead of Labour's death duty raid on pensions. The receipts, paid in the year to March, marked a £750m increase on last year's record high, according to HMRC data. The Treasury estimates the levy will raise more than £14bn in 2029-30. The £325,000 nil-rate band, which was set in 2009, would be £510,9211 today, if it had risen with inflation. A Treasury spokesman said: 'We continue to incentivise pensions savings for their intended purpose – of funding retirement instead of them being openly used as a vehicle to transfer wealth – and more than 90pc of estates each year will continue to pay no inheritance tax after these and other changes.'
