Inheritance Tax (IHT) is often considered a complex aspect of estate planning, but several reliefs exist to help reduce the amount payable. Properly utilising these reliefs can make a significant difference for beneficiaries, but navigating the rules can be challenging. That’s where experienced solicitors, such as WT Solicitors, can offer valuable assistance. Below, we will explain key IHT reliefs and when professional help may be necessary to claim them.
1. Taper Relief
Taper relief applies when a gift is made during a person’s lifetime, but the donor passes away between 3 and 7 years of making the gift. The relief reduces the amount of IHT payable on the gift, depending on how many years have passed between the date of the gift and the date of death.
In order for any benefit to be taken from the Taper Relief, the person making the gift must have survived a minimum of 3 years of making such gift.
When might you need a solicitor? Understanding the timing and calculating the exact reduction in tax can be tricky. Our solicitors can help ensure all relevant documentation is accurate and deadlines are met, minimising the risk of errors that could lead to penalties or overpayment.
- Fall in Value Relief
This relief is designed to address situations where the value of a gifted asset has decreased between the time it was given and the donor’s death. The tax calculation can be adjusted based on the asset’s lower value at the time of death, ensuring that IHT isn’t overpaid on an asset.
When might you need a solicitor? Claiming this relief involves precise valuation of the asset at multiple points in time. Disputes over valuations can arise, and WT Solicitors can provide expert guidance to present a strong case to HMRC.
- Quick Succession Relief
Quick Succession Relief applies when IHT is payable on the same property within a short period – usually within five years. For example, if a beneficiary inherits anything on which IHT was paid and then passes away soon after, this relief reduces the IHT due on the second transfer.
When might you need a solicitor? Handling successive IHT liabilities can be overwhelming, especially during an emotionally challenging time. WT Solicitors can help navigate the process, ensuring that the relief is applied correctly and that beneficiaries aren’t burdened with unnecessary costs.
- Post-Death Loss on Sale Relief (Shares)
If the executors of an estate sell shares at a loss within 12 months of the death, this relief allows the IHT calculation to be adjusted based on the lower sale value. This ensures that beneficiaries are not unfairly taxed on an overestimated asset value.
When might you need a solicitor? The rules around timing and valuation for this relief can be extremely intricate and require specialist knowledge. A solicitor’s expertise ensures compliance with HMRC’s requirements.
- Post-Death Loss on Sale Relief (Property)
Reliefs such as Post-Death Loss on Sale Relief apply to property as well. This can reduce the taxable value of qualifying land, potentially exempting them entirely from IHT.
When might you need a solicitor? The eligibility criteria for these reliefs can be complex and require specific application to be drawn up. Solicitors can assist in identifying whether assets qualify and in preparing a thorough claim to maximise the relief available.
Why Work with WT Solicitors?
Claiming IHT reliefs is a meticulous process that requires attention to detail and comprehensive understanding of tax laws. Errors in applications can result in missed opportunities to reduce the tax burden. At WT Solicitors, we provide:
- Expert advice: We help identify all applicable reliefs and guide you through the claims process.
- Comprehensive support: From asset valuations to preparing legal documents, we handle the complexities, so you don’t have to.
- Peace of mind: Our team ensures compliance with tax laws and maximises the reliefs available to your estate.
If you are dealing with an estate and want to ensure that IHT reliefs are claimed correctly, contact WT Solicitors today.
Your legacy, our responsibility.
