This briefing focuses on two important Inheritance Tax (IHT) planning issues, namely:
One planning strategy conventionally used has been to ensure that each spouse or civil partner was able to use their IHT nil rate band on their death. Proposals which were announced in the Pre-Budget Report in October 2007 have significantly altered that strategy in many cases and the purpose of this briefing is to explain the significance of those changes.

Generally, everyone is entitled to an IHT exemption when they die, known as the nil rate band (see table below). In theory, this means that a married couple or civil partnership have two nil rate bands between them. However, as will be illustrated, it is not always as straight forward as that.

IHT nil rate bands
Tax year
£
2007/08
300,000
2008/09
312,000
2009/10
325,000
2010/11
350,000

In addition, the growth in the value of houses in the UK over the past few years (notwithstanding the current slowdown in the market) has caused the combined estates of many couples to rise above the nil rate band. The value of homes plus other significant assets means that IHT planning is now more important for couples who would not necessarily think of themselves as wealthy.