Inheritance Tax changes in 2012
In an attempt to encourage individuals to leave a legacy to charity within a Will, changes were made during this year’s Budget which will now see Inheritance Tax being charged at 36 percent rather than 40 percent, for those who leave 10 percent or more of their entire Estate to charity.
Until recently, English Inheritance Tax law stated that for estates worth more than £325,000, all assets valued above this amount (including any assets transferred in the seven years prior to the person’s death) were to be taxed at 40 percent.
This threshold, or “nil rate band” can still be transferred to the remaining spouse on the first individual’s death, thereby increasing the threshold to £650,000.
However, having experienced a significant drop in the amount of revenue gained from Inheritance Tax in recent years, the government also announced that it plans to boost this revenue once more by introducing new legislation which could see non-charitable Estates or more valuable Estates being charged a higher rate of tax.