Nil Rate band tax planning for inheritance tax strategy.
Feb 26th, 2007 by complex001
To minimise a couples estates liability to inheritance tax on the death of the second individual the simplest solution is to ensure that both Nil rate Bands are used. Usually upon the death of the first individual everything passes to the 2nd. However as between spouses there is an inter spousal exemption this serves to save no inheritance tax, though it does waste the first individuals nil rate band allowance £285,000. This allowance can be fully utilised by incorporating into the will instruction to give away an amount of asset equal to the nil rate band (285,000) on first death. This has the effect of ensuring that £114,000 is removed from the inheritance tax bill.