Lower your inheritance tax bill – even after you’ve paid


It has not increased since 2009, even though house prices have increased by 60pc. The ‘family home’ allowance, which offers an additional protection of £ 175,000 to those who transfer their primary residence to a direct descendant, will also not increase until 2026 at the earliest, while the income tax breaks, capital gains and pensions were also frozen.

Spouses who can split their allowances can forward up to £ 1million tax-free. But middle-class families have increasingly lost to a tax designed to hit the richest because house prices have gone up.

Richard Bull of Crowe, a tax firm, said: “More families will be forced to pay IHT in the future as asset growth continues while tax breaks are largely frozen. Some 60pc of the estates on which the IHT is paid include residential properties.

However, there are ways to pay less, even after HM Revenue & Customs remits the invoice.

How to reduce your bill

One option is a legal document, known as an “amendment deed,” which effectively allows families to rewrite the deceased’s will within two years of their death and redistribute their estate in a way that results in less loss. ‘taxes.

Andy Butcher of Raymond James, a consulting firm, said the act could also be used to reduce future tax bills. “If a person dies and leaves their estate to their spouse, the surviving spouse’s estate will be assessed for the IHT upon their subsequent death,” he said.

“Using a deed to misappropriate part of the inheritance, say £ 325,000, in a trust will reduce the estate of the surviving spouse.” This can reduce the value of an estate to less than £ 2million, at which point the family housing allowance begins to decline.

“The spouse can also be a beneficiary of the trust,” Mr. Butcher said. “It allows them to borrow money from the trust when needed rather than withdrawing capital or income. They could even pay interest to the trust, further reducing their estate and future taxes. It also ensures that any future growth in trust assets does not fall within the taxable domain.

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