Inheritance tax relief could offer ‘silver-lining’

A relief on inheritance tax could offer a “silver-lining” during the coronavirus pandemic, as well as offer “much needed capital” amid the ongoing economic crisis, according to a full service law firm.

Winckworth Sherwood suggested it had seen a “significant increase” in the number of people seeking to ensure their personal affairs are in order, as Covid-19 continues to impact the health and finances of the UK.

Currently, the threshold for inheritance tax in the UK sits at £325,000, while the standard rate – the amount charged on the part of an estate above the threshold – is 40%. The estate can pay inheritance tax at a reduced rate of 36% on some assets if an individual leaves 10% or more of the ‘net value’ to charity in their will.

Commenting on the potential relief with inheritance tax, partner at Winckworth Sherwood, Tim Snaith, said: “Since the outbreak of Covid-19 we have seen a significant increase in the number of people looking to ensure their personal affairs are in order as the pandemic impacts both families’ health and finances.

“Relief on inheritance tax can offer a silver-lining on the coronavirus cloud and much needed capital during this economic crisis. As executors look to sell-off inherited portfolios which are quickly diminishing in value, a tax relief of 40% on losses is welcomed.

“The property market may of course follow suit, so it’s good to know that executors are given a longer time period to apply for loss relief from property sales.
“Depending on how the crisis unfolds, we may also see an increase in applications for quick succession relief if multiple family members pass away within a short space of time. However, applying for these reliefs is not a simple process but one which requires care and thought.

“We would urge those who are or have been liable to inheritance tax to use the ongoing extremely difficult situation as an opportunity to ensure their financial affairs are in order and where appropriate, seek legal counsel.”

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