Two key changes brought into effect in the autumn statement include that the Inheritance Tax limit, being the amount an individual is allowed before inheritance tax is payable, has now frozen until April 2028. An individual has a nil rate band allowance of £325,000 before inheritance tax is payable at 40%, and in addition to this we have the residence nil rate band currently set at £175,000 per individual where a family home is left to direct descendants, usually children, although there are other persons who can fall within this category. The allowance of £325,000 has not changed since 2009, and with inflation and increasing house prices will mean more families will now face paying Inheritance Tax over the coming years.
In another development it had been confirmed that there would be a cap on the amount an individual paid towards their care costs from October 2023 and that cap would be set at £86,000 which is equivalent to approximately three years of residential care. This meant the maximum amount anyone would have to pay for personal care to meet their eligible care and support needs from October 2023 onwards would have been £86,000. In today’s budget, the chancellor has confirmed that this will now be delayed by two years to October 2025.
There are allowances and ways of tax planning within your estate in lifetime and within your Wills to make the most of allowances that are available, both in relation to Inheritance Tax and assets that are subject to financial assessments for the payment of care fees.
To discuss further, please do not hesitate to speak to Ann Coutts.