You may hear the phrases “Inheritance Tax” and “Capital Gains Tax” but not know the allowances and how these work.
The inheritance tax nil rate band has now been frozen at £325,000 and will be until tax year 2027/2028. It has been at this level since 2009 – which means the allowance will have been frozen for nearly twenty years. Had it increased in line with inflation, the allowance would have been £480,000.
The freezing of these allowances means the use of transferable allowances between spouses is all the more important – giving potential allowances for a couple’s combined wealth of £1m. The transferable allowances do however have to be claimed within two years of death – this is not automatic.
In addition, capital gains tax allowances are due to halve from April 2023, reducing to £6,000 for individuals and personal representatives and £3,000 for most Trustees.
Mitigation of inheritance tax and capital gains tax is an important strand of what we do – please do get in touch if we can help at email@example.com or on 01904 624903.