In the last few months the country has fluctuated between fear, hope, dismay and doubt. The government’s latest announcements have provided relief for many individuals and businesses and the hope of a brighter future.
The pandemic has prompted many to consider their futures and the futures of their loved ones. Frontline workers are among them. A study published by Amnesty International on 13 July indicated that 3,000 health workers have died of coronavirus in 79 countries. 540 of those are linked to England and Wales. Current legislation appears to offer 100% relief from inheritance tax for those frontline workers responding to emergency circumstances who provide ‘medical, ambulance or paramedic services’ and die as a result of contracting Coronavirus in the course of their employment. It has yet to be formally confirmed by the government that this will apply to all frontline workers responding to COVID19, however, given the generosity of the recently announced reliefs from tax, one would hope so.
So what reliefs are available from inheritance tax for those of us who don’t work on the frontline? Amongst them are:
- Spouse exemption – this is 100% relief from inheritance tax for assets passing to a spouse/civil partner
- Gifting and the seven year rule – gifts made over £3,000 in any one tax year reduce the availability of your tax free allowance (currently £325,000). However, if you survive seven years, your allowance is renewed
- Charity exemption - any gifts to charity are free from inheritance and if you give at least 10% of your NET estate your estate could benefit from a lower rate of inheritance tax at 36% instead of 40%
- Business Property relief - subject to certain criteria you may be able to get 100% relief from inheritance tax on a business or interest in a business or shares in an unlisted company
With planning, a combination of these reliefs and exemptions can potentially allow an entire estate to pass free of inheritance tax to an individual’s chosen beneficiaries.
If you want to ensure that you can use the reliefs to the benefit of those you love please get in touch. As the saying goes; make hay while the sun shines. In the coming months we may see changes to help pay for the ongoing cost to the country of the Coronavirus pandemic.