Inheritance Tax
Rates
The IHT nil rate band remains fixed at £325,000 until the end of 2027/28. Holding the threshold at the same amount for 19 years (from 6 April 2009) will bring far more people into the scope of the tax. However, the £175,000 ‘residential nil rate band enhancement’ on death transfers can reduce the impact where it applies.
A married couple may now be able to leave up to £1 million free of IHT to their direct descendants (£325,000 plus £175,000 from each parent), but the rules are complicated, and the prospect of the nil rate band being fixed for another 4 years increases the importance of proper IHT planning.
Simplification
Normally, personal representatives of estates have to pay Inheritance Tax before they can obtain a grant of probate, which means that they may have to borrow money to pay the tax as they cannot access the assets without the grant. From 1 April 2024, an administrative change will allow personal representatives to apply for a ‘grant on credit’ from HMRC, avoiding the need to take out a commercial loan.
Restrictions on reliefs
As announced in the 2023 Spring Budget, reliefs applicable to woodlands and agricultural property will be restricted to land in the UK with effect for transfers made on or after 6 April 2024.