Inheritance Tax: New Updated Tax Laws Post October 2024 Budget

WE GIVE A FREE TAX ASSESSMENT

Kier Starmer is the PM with a new set of government targets as of December 2024.

The Inheritance Tax thresholds have been frozen again and will not be raised now, until at least 2030, according to the Reeves budget in October 2024.

The basic tax allowance is still £325,000 and has been frozen since 2009 by Alasdair Darling and frozen by Labour again.

The RNRB is an additional allowance to the £325,000 NRB and is also frozen until 2030.

The additional RNRB allowance has to be claimed and is not available to everybody. The extra allowance may be offset against your property which must have been occupied by you as your principal private tax residence (PPR). The additional RNRB is available if all or part of a ‘qualifying residential interest’ is inherited, on the death of the owner. In your Will, the property must be transferred to a direct descendant – a child, stepchild, adopted child, foster child or grandchildren. The transfer to direct descendant’s must be outright but transfers into trust for the benefit of these descendants is guaranteed if it is into a Protective Property Trust. The trust guarantees the RNRB can be claimed if you qualify.

In the transfer to direct descendants by using a Will, care must be taken as to whether qualifying assets
do form part of the deceased estate before they are inherited. This specifically may include qualifying Business Assets. If the deceased has downsized to a less valuable residence or has ceased to own a residence, that in part, may still be available as long as the deceased left a smaller residence or assets of equivalent value to direct descendants. We can claim allowance in this situation. Keep all transaction receipts to prove eligibility.

The RNRB allowance is still frozen at £175,000 and will not change before at least 2030 according to the
most recent tax budget in October 2024.

This will be limited by the value of the residence net of any mortgage charged on it. The relief is not set
against the gift of the residential property but will be applied to the charge on the estate generally. As it is not focused on the residential property specifically, there could possibly be a charge on the residential
property.

Married couples and civil partners can carry forward qualifying RNRB at second death, if it was unused when the first partner died. As a widow, the cut-off date for claiming their unused NRB allowance is 13th March 1975. There may be a limited transferrable NRB between 21st March 1972 to 12th March 1975.

NOTE: these are the maximum amounts. The available RNRB allowance will be reduced accordingly if the value of the property is less than this. Business Trusts, if proved for a real business post death, can claim lower Inheritance Tax rates.

NOTE: These totals include everything in the estate – ALL assets.

The RNRB allowance still tapers away when an estate is over £2 million by £1 for every £2 by
which the estate exceeds £2 million.

Reeves has now included Pensions to be part of taxable estates. Call if you need
clarity and we can help professionally.

Our Professional Executors are recommended to most effectively claim Inheritance tax reliefs in
probate.

GIFTING

You can EACH gift £3,000 a year Tax Free and for a wedding £5,000. It is also possible to gift money from Proven Surplus Income. Accountant’s records are needed.

You are always allowed to gift any amount to anyone.

As long as you survive seven years, it will qualify as Tax Free. After the third year, the rate drops from 40% to 32%, in year 4 to 24%, year 5 to 16%, year 6 to 8%, after year 7 to zero.

Beware of ‘Gifts with Reservation of Benefit’. GROB. This where you keep the rental income or benefit by living rent free in the gifted asset. The gift is deemed not to be a true gift and the tax due on it would still be charged.

NOTE: all of these laws are subject to change in the future. Our advice can only be based on the
laws at this time. October 2024.