An investment watchdog has raised concerns that Inheritance Tax (IHT) changes due to take effect next month may have left Britons ‘confused’ about their IHT liability.
The comments come ahead of the introduction of the new Residence Nil Rate Band (RNRB), which will take effect at the beginning of April.
The RNRB can entitle certain people to an additional tax-free allowance of £100,000 on top of the existing allowance of £325,000 if their estate is left to direct lineal descendants or other ‘qualifying beneficiaries’ in their Will.
However, the new provisions are complex and most people will need to seek careful legal advice in order to determine whether RNRB is available in their particular circumstances, and to implement the necessary provisions in their Will ahead of time.
Hugi Clarke, director at investment firm Foresight Group, has warned that individuals should tread carefully and not overestimate the “Government’s generosity”.
He said: “There are a number of individuals with a significant IHT problem who may fall into the trap of thinking it is solved by this change. The fact of the matter is IHT receipts are predicted to be one of the fastest growing receipts and there is a danger people will misunderstand just how far this allowance goes”.
Concerned parties are urged to consult a specialist solicitor for further information about the RNRB, an expert analysis of your requirements and situation-specific Wills and Inheritance Tax planning advice.
The new provisions are not as generous as one might believe and the provisions are complex particularly in relation to downsizing.