The Government has announced that the inheritance tax nil rate band will remain frozen at £325,000 until at least April 2019.
This overturns legislation that was due to increase the nil rate band to £329,000 from 6 April 2015. It is intended that the extra revenue received will meet part of the costs of funding the care of elderly persons.
According to the Society for Trusts and Estates Practitioners, fixing the nil rate band at £325,000 could bring an extra 5,000 estates into the IHT net by 2019. An increasing number of individuals will therefore need to consider the potential inheritance tax liability their families will face when they die.
The importance of lifetime inheritance tax planning cannot be underestimated. There remain a number of allowances and reliefs available to those who wish to take steps to mitigate their tax liability. However the rules governing the allowances and reliefs are often only partially understood with the result that the planning is ineffective.