Each year, The Norfolk Hospice relies on £2.5 million of support from the community to operate their essential services. A gift in a will has the power to support those facing a life-limiting illness. To support the Hospice with their legacy campaign, Stephenson and Smart have provided informative articles around wills and estate planning.

If you own property, or other assets, it is important that you think about the value of your estate and the tax implications that may be associated with it, sooner rather than later.

With careful planning, guided by a professional, you will be able to ensure that your estate is left to those you wish it to be, and may be able to avoid leaving them a tax burden.

Inheritance Tax

The tax associated with estates is inheritance tax (IHT).  This is a tax on the estate (the property, money and possessions) of someone who has died.

If the value of your estate is below £325,000, there is normally no inheritance tax to pay. In many circumstances we also have an additional main residence nil rate band of £175,000.

If the value of your estate is above £325,000, or £500,000 if you will benefit from the additional main residence nil rate band, you can plan your estate in advance by careful tax planning and by creating a will to mitigate or reduce the IHT having to be paid on them.

Estate Planning

It is also possible to give gifts and transfer assets while you are still alive, to alleviate the value of your estate on death.

Gifts that are exempt from IHT in these circumstances include:

          ·       Annual exemption of £3,000 (can be carried forward for a maximum of one year).

          ·       Wedding or civil partnership gifts.

          ·       Gifts of up to £250 (per person per tax year).

          ·       Gifts to charities, museums, universities or community amateur sports clubs.

          ·       Gifts to political parties.

In most circumstances, if a residential property is given to someone else before the owner dies it will be classed as a potentially exempt transfer (PET).  However, the beneficiary must survive for a period of seven years for the exemption to stand.

In this scenario, the original owner cannot continue to live in the property rent free, otherwise the estate may have to pay inheritance tax on it under the reservation of benefit rules.

Spouse or civil partners

There is no inheritance tax relief that affects a greater number of people than the spouse or civil partner exemption. It removes a large proportion of estates from the IHT charge and is of major importance in estate planning.

The exemption means that all assets passing on death to a surviving spouse or civil partner, or given by lifetime gift, are exempt from IHT, if the couple are both UK domiciled.

Estate planning can be complicated, and exemptions and reliefs are subject to change.  Those quoted in this the article were correct on 31 August 2023.

I would advise anyone who owns property, or has an estate exposed to IHT, to seek the advice of someone who is qualified to advise on probate and estates.  The Society of Trust and Estate Practitioners are a good benchmark.

To discuss leaving a gift to The Norfolk Hospice please contact In Memory Fundraiser, Carol Mott, on 01485 601701 or email [email protected]

This article was written by Claire Melton from Stephenson Smart.

Stephenson Smart Chartered Accountants have offices throughout Norfolk and can offer expert advice in probate, trusts and estates. They are working with The Norfolk Hospice as their nominated Charity of the Year.

They are working with The Norfolk Hospice as their nominated Charity of the Year.