Inheritance tax 'myth' risks leaving Britons caught out and facing thousands of pounds in bills
Inheritance tax 'myth' risks leaving Britons caught out and facing thousands of pounds in bills
PA
An inheritance tax myth could risk leaving Britons facing thousands of pounds on their death levy bills.
Britons who opt out of marriage or civil partnerships could miss out on an asset from their partner as cohabitees do not carry a status under inheritance law.
Experts at Hanne & Co Solicitors explained that inheritance tax provisions favour spouses and civil partners.
The Wandsworth-based law firm claimed there is a common “myth” in England and Wales about inheritance tax exemption for long-term couples.
Married couples can cut their inheritance tax bill by handing parts of their estates to one anotherPAMichael Culver, chairman at Solicitors for the Elderly (SFE), said: “A common myth is if couples are in a relationship for decades they may benefit from the same exemptions as those who are spouses - which is not true.
“Unmarried couples could have lived together for 40 years, had children together and properties, but if one dies then there are implications.
“If a partner dies, all the other person in the couple will receive is £325,000 tax-free.”
Married couples or Britons in civil partnerships can use the ‘Nil Rate Band’ of £325,000 and ‘Residential Nil Rate Band’ of £175,000 if unused.
More than 40,000 people are now liable to pay inheritance tax, up from 33,000 in the previous financial yearPASuch a move can ensure the surviving spouse or civil partner can secure up to £1,000,000 inheritance tax-free between the two estates.
The same luxury is not available to Britons who are not married or in a civil partnership.
Culver continued: “Similarly, the rules around the residence nil-rate band can also be confusing and feel somewhat unfair.
“This is because people who do not have children cannot benefit from the £1million allowance.
The latest statistics from Whitehall revealed just four per cent of deaths in the UK resulted in the paying of inheritance tax. PA“The devil really is in the detail with this one, and it’s really important to be aware of the rules.”
Hanne & Co have suggested cohabiting couples both write Wills to ensure the surviving partner can receive some or all of the other’s estate.
A record-number of Britons are now liable to pay inheritance tax after a spike in payments led to a 20-year high.
More than 40,000 people are now liable to pay inheritance tax, up from 33,000 in the previous financial year.
The change is almost double the number coughing up cash for the death duty in 2018/19, figures from His Majesty’s Revenue & Customs have shown.