Inheritance Tax for couples

Main impact of Pre-Budget October 2007

• Ø  From 9th October 2007 claims can be made to transfer any unused Nil Rate Inheritance Tax Band on the first death of a couple, to the estate of the surviving spouse or civil partner on their subsequent death, irrespective of when they  first passed away.
• Ø  Claims must be made within certain time limits after the second death.
• Ø  This means that married couples or civil partners may be better placed to fully utilise both Nil Rate Bands for Inheritance Tax purposes, providing they have appropriate Wills in place.
• Ø  The first £300,000 (currently) of an individual's estate is taxed at 0%, and often referred to as the ‘nil rate tax band'. Prior to the changes unused Nil Rate Tax Bands were often lost when the estate was left to the surviving spouse, unless a Nil Rate Band Discretionary Trust Will was in place.

• Ø  Married couples and civil partners with estates currently up to £600,000 can avoid Inheritance Tax totally, providing they have appropriate Wills in place.
• Ø  Where one spouse or civil partner has died prior to 9th Oct 2007, then a claim can be made to use the deceased's unused Nil Rate Tax Band when the survivor dies.

• Ø  Couples who have had Nil Rate Band Discretionary Wills drawn up, as they may no longer be appropriate for their circumstances.
• Ø  Where a spouse or civil partner has died within the last 2 years, as action may be possible to make significant tax savings in light of the changes.
• Ø  Couples who have no Wills in place at the moment.
• Ø  Couples who currently are leaving gifts in their Wills to others, such as children, relatives or friends may wish to review their Wills to take advantage of the changes.