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How to give the Exchequer £105,200 if you wish.
The tax tail should never wag the dog. Do not allow the tax implications to prevent you carrying out your real objectives, but ... (occasionally it is possible to have your cake and eat it - ask us if you can).
Take an example combined estate of for husband and wife totaling £526,000 (or any larger sum).
Many people write their wills leaving all their estate to the surviving spouse. These do not use the nil rate band on the first death if the spouse is domiciled in the UK. This is because all transfers to a UK domiciled spouse is exempt. (Where the recipient is not UK domiciled the exemption is capped at £55,000).
There is no IHT on the first death. On the second death tax is payable on £526,000 less the nil rate band £263,000 = £263,000 at 40% = £105,200 tax payable.
If the surviving spouse can live comfortably without the first £263,000 of the combined Estate, then consider Wills which leave £263,000 to the next generation at the first death. There is no IHT payable on the first death, and on the second death the estate is £263,000 less the nil rate band £263,000 = £0 at 40% = £0 tax payable.
Potentially a very simple way to pass another £105,200 onto your heirs.
It is important to take further advice before acting on this idea.
See also Inheritance Tax, Inheritance Tax Plan, Interest in Possession, Joint Ownership, Giving
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