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People 'should plan wills to minimise inheritance tax'

People 'should plan wills to minimise inheritance tax'

Consumers should plan their wills with a view to minimising their inheritance tax liability, it has been suggested.

Writing on lovemoney.com, Jane Baker suggested that the levy is likely to hit more people as a result of an impending freeze on the threshold.

She pointed out that the nil rate band, under which no tax is paid, normally rises each year.

However, in the Budget - which was delivered by chancellor Alistair Darling in the House of Commons last month - it was frozen and it may remain the same for the next four years.

Ms Baker remarked: "This means many more estates will now become liable to inheritance tax which would have escaped a charge if the nil rate band increased in the normal way each year."

She went on to state that married couples and those in civil partnerships can effectively double the value of their threshold from £325,000 to £650,000 when the second spouse dies.

This is achieved by transferring any unused allowance on the death of the first partner to the second.

In addition, people can leave gifts during their lifetimes and as part of their will which escape the levy, she noted.