What are Nil-Rate Tax Bands and what do they mean for Inheritance Tax?

In a recent publication with Scottish Financial News, Rhian Morgan (Acumen Financial Planning) delves into the intricacies of nil-rate bands in the context of recent proposed changes to inheritance tax by the Prime Minister.

With considerations of potential abolition, it becomes crucial for individuals and families to understand the current nil-rate bands, often overlooked by 70% of the population. The nil-rate band, set at £325,000 for the financial year 2023/24, defines the threshold which an estate remains exempt from inheritance tax.

Complexities arise with the introduction of the ‘residence nil-rate band’ and specific rules for couples. In particular, the frozen inheritance tax threshold until April 2028 prompts concerns about more estates being subject to increased tax. However, with strategic measures such as lifetime gifts and careful financial planning, this can be navigated.

While the nil-rate band threshold is anticipated to unfreeze in 2028, discussions by the Prime Minister may bring changes to the inheritance tax budget as early as 2024. For those passing wealth to their families, seeking advice from a financial planner can help maximise wealth for future generations.

Read the original article here.

Editors notes:

The information provided is the opinion of Rhian Morgan, Certified Financial Planner and Director of Acumen Financial Planning, and should not be regarded as advice. Should you wish to enquire about the content of this article, please get in touch.