For those that do not want to get married; but would like the same protection financially and legally as a married couple, then the new Opposite-sex civil partnership laws that came into effect on 1st January 2020 could be for you. This will mean that couples registering and undertaking an opposite or same-sex civil partnership will be exempt from Inheritance tax in the same way as a married couple would be.
The basic Inheritance tax threshold is £325,000. In the case of a married couple, and from 1st January 2020 a civil partnership, Inheritance Tax isn’t usually paid when the first one dies. Often everything passes to the survivor, and Inheritance Tax will then be due on the couples’ joint wealth when the second one dies.
In April 2017 a new tax relief was introduced. It can only be claimed against the estates of homeowners who are ultimately leaving their home to their children, stepchildren or grandchildren. It is called Residence Nil Rate Band and the current value is £150,000 (rising to £175,000 on 6th April 2020). Overall, this means that no Inheritance Tax will be due on the estate of a couple who own a property which they are leaving to their descendants unless the total value of the estate is over £950,000 (£1million from 6th April 2020). Anything over the Inheritance Tax threshold is taxed at 40%. If you believe Inheritance tax may be due on your estate when the time comes, we can advise regarding gifts you could make to reduce your estate value.
Look out for more information regarding this on our next newsletter or ask us for our handy factsheet. It may also be a good idea to speak to a Financial Advisor for advice as it may be possible to reduce the potential Inheritance Tax bill. If you would like us to recommend someone for you to talk to about this issue, please get in touch.
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