Will my estate have to pay inheritance tax?

Inheritance Tax and key from inherited property.

Each year, over £5 billion is generated through Inheritance Tax in the UK. This is a colossal sum and only set to increase given the events of the last 18 months. It is very important to realise that HM Revenue and Customs are first in line for their share of an estate before any beneficiaries receive anything!

In this article, we will discuss the potential Inheritance Tax contribution your estate might make to the UK exchequer.

There is a threshold for Inheritance Tax. It starts at £325,000 and it’s been at that level since 2009. That means if your estate is less than that, you will not pay any Inheritance Tax.

So, Will I have to pay Inheritance Tax is my estate is worth more than £325,000?

Your estate is made up of all of the assets, cash, property etc. that you own at the time of your death. From that figure, you take away any debts you have at the time of your death. That final figure is the value of your estate.

You might then think that, if my estate is worth more than £325,000, my estate will have to pay Inheritance Tax – currently standing at 40% of the amount over the £325,000 threshold.

However, there are a number of exemptions and allowances that mean you can pass on a lot more than the £325,000 threshold without your estate having to pay ant Inheritance Tax.

If you are married or in a civil partnership, anything that you pass to your spouse or partner is free of Inheritance Tax. Please note that if you are cohabiting but not married or in a civil partnership, you cannot benefit from this exemption. This means that if you have an estate worth, say, £450,000 which is split between the family home worth £300,000 and other property worth £150,000, if you left your house to your spouse or civil partner, there would be no Inheritance Tax to pay on the £150,000 balance of your estate even though the total estate is worth more than the £325,000 threshold.

In addition, if you have any unused allowance, this can be used by your spouse or civil partner (but remember, not by someone you are cohabiting with but to whom you are not married or in a civil partnership) when they pass away. That means if you pass your entire estate to your spouse or partner, it means your allowance of £325,000 remains intact. When your spouse or partner then dies, your unused allowance can be carried forward and added to theirs. That means that their Inheritance Tax threshold rises to £650,000 in their estate (your allowance of £325,000 plus their allowance of £325,000).

Your Family Home

There is also another allowance you can take advantage of in relation to the family home. If we follow the example above of leaving your home to your spouse or civil partner, when your spouse or civil partner dies, if they leave the family home to your children or grandchildren, they can then take advantage of an additional allowance. Both you and your spouse or civil partner are entitled to an allowance of £175,000 when the family home is left to a child or grandchild. Basically, that means that your total allowance is £500,000 and your spouse or civil partner’s allowance is £500,000, your children would have a combined allowance of £1 million of estate before any Inheritance Tax is payable. However, the nil rate band is not available if the total estate is worth more than £2 million.

There is also a “gift allowance” where you do not pay Inheritance Tax on any gifts you make to your children or other family members whilst you are alive. This allowance is available provided you survive for 7 years after making the gift. If you do die before the 7 years has passed, some Inheritance Tax will apply but the amount due will depend on how many years have passed since the gift was made. The value of the gift on which Inheritance Tax is paid reduces gradually from the third year onwards.

We would point out that we have given you a very broad overview of how Inheritance Tax works. Everyone individual’s circumstances are different and it is always best to ask for advice based on your own personal circumstances. If Inheritance Tax might be an issue, it is always better to act sooner rather than later.

If you do need advice in this area and wish to consider doing some estate planning, please get in touch with us.

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How do I change my Will?

If you’ve made a Will, congratulations! You join a select club of only 30% of the population in Scotland who’ve made a Will. However, having made a Will, what happens if your circumstances change? Things change over time. You may have been divorced or re-married. You may have a new grandchild. You might decide to change your executor. There are lots of reasons why you should review your Will.

It is important that any changes you wish to make are dealt with properly. Don’t be tempted to write a short note and place it with your Will. Doing something like that might cause more harm than good. You need to remember that a Will is a legal document. When you prepared your Will, it is likely it was created by a solicitor. It will have been set out correctly and properly witnessed. Don’t be tempted to write a note that might just undo a properly prepared Will.

Making changes to a Will

There are two ways you can change your Will. You can make changes by using a Codicil or you can make an entirely new Will.

A Codicil is a formal document that allows you to make changed to your Will. It is generally used for minor changes rather than major changes. It is important that you take legal advice to make sure nothing in a Codicil contradicts the remaining terms of the Will or introduced ambiguity that would cause difficulties when winding up your estate or, worse still, push your estate into intestacy.

You can, technically, have as many Codicils if you want. However, the more Codicils you have, the greater the risk of conflict, confusion and ambiguity.

When you wish to make major changes to a Will or if the changes you wish to make are numerous or complicated, the best option may be to create an entirely new Will. This means you will start with a clean slate and can set down your wishes in a clear, concise manner. The new Will also revokes (cancels) the previous Will and it is good practice to destroy the old Will to avoid any possible confusion.

The process of changing a Will is very straight forward, but we recommend it is done properly.

If your circumstances have changed and you need to update your Will, please get in touch with us. Of course, if you have not yet made a Will, it makes very good sense to prepare one. Get in touch with us now:

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S.M.I.L.E Counselling is Wallace Quinn Livingston charity partner for 2021/22

Wallace Quinn are delighted to announce we’ve chosen ‘S.M.I.L.E. Counselling’ in Livingston as one of our charity partners for the coming year.  S.M.I.L.E. support young people with mental health issues through outreach counselling.  The West Lothian based charity formed in 2015 and earlier this year moved into offices at the Wallace Quinn building in Fairbairn Place, Livingston.  S.M.I.L.E. stands for support, motivate, inspire, lead and empower.

WQ Managing Director John Quinn meets S.M.I.L.E. founder Declan Harrigan

S.M.I.L.E. help people aged 11-24 who are struggling with how they feel.  Their team aim to have a positive influence on the lives of those who are having problems at home or at school with anxiety, depression, anger and a range of other issues where talking to somebody can help.  Their services include one-to-one sessions in person, on the phone, online or through various chat services.  

Wallace Quinn have initially agreed to sponsor one of the counselling rooms at Livingston, with funding to keep it operational throughout 2022.  We’ll also be working with S.M.I.L.E. with charity fundraising activities throughout the year.

one of the counselling rooms at S.M.I.L.E.

One of the top asks from S.M.I.L.E. to Wallace Quinn is introductions to like-minded businesses and individuals who may be interested in helping the charity through donations or other support – if you’d like to find out more, please get in touch  to find out more, or visit www.smilecounselling.org.uk

Our support of S.M.I.L.E. is in addition to our long-standing support of St Andrew’s Hospice in Airdrie;  we’ve been raising money to help the remarkable work at the hospice since we started our business back in 1990 and look forward to continuing our relationship for many years to come.  

Wallace Quinn solicitor races to meet unusual demand 

At Wallace Quinn, we’re used to meeting urgent and unexpected deadlines, but one member of staff recently took a call which really raised the stakes…

 A Wallace Quinn Trainee Solicitor had to abandon his work when his partner went into labour.

Jonathan Poole had only been in the office for a few hours when the call came from partner Naomi on 24 August.

Jonathan grabbed his coat and rushed to collect Naomi and whisk her to hospital.  Baby Isla was in as much of a hurry has her dad, arriving at 1.30pm weighing a healthy 10lb 12oz.

Jonathan said,

“One minute I was preparing paperwork for a house purchase and the next I was in the car cursing traffic and hoping I would be on time.  I made it – just.   Naomi was amazing and I’m over the moon to meet Isla.’  

Jonathan and Naomi already have a son, Billy, who is two years older than his new baby sister.

Wallace Quinn Managing Director John Quinn said,

‘As an excuse to leave work early, it is certainly one of the best ones I’ve heard in thirty years of business!  We’re all delighted for Jonathan and Naomi and wish Isla a warm welcome to the world’.  

Isla and Naomi are now safely back at home and Jonathan has taken some paternity leave.  With a new-born and a toddler at home, we hope Jonathan and Naomi manage to get any sleep they can in the coming weeks! Oh, and happy 40th birthday Jonathan as well!

Now is the ideal time to sell residential property

The housing market is expected to remain solid for the next few months with price increases slowing but continuing overall well into the new year.

With many more people living AND working from home, many have begun to reassess what they need from a property, with outdoor space and home offices now high on the wish-list of property hunters.

Mortgage rates continue to be amongst the lowest they’ve been in 40 years, making the prospect of borrowing more to move home appealing to many buyers.

Wallace Quinn offer a full estate agency and conveyancing service, meaning a one-stop shop for every step of the house-sale process.  We work with Keys Estate Agents and the ESPC to offer a top-class valuation and marketing service, with our in-house solicitors delivering a hassle-free conveyancing process.  Our clients can expect us to:

  • Provide a professional and accurate evaluation of the market potential of your property
  • Arrange a suite of marketing materials to present your home in the best possible light
  • Showcase your property on a variety of online websites to maximise its exposure to buyers
  • Deal directly with potential purchasers on your behalf and arrange/host property viewings
  • Use our years of experience to increase interest and excitement among buyers to help realise the best possible sales price
  • Ensure that when a sale is agreed, the conveyancing process is thorough, quick and hassle free

If you’d like to have an informal chat on the potential of your property in the current market, get in touch by filling in the form below:

    Forget WFH (work from home) and embrace WFS (work from Spain!)

    After a year of WFH (working from home), many of us have realised that we can actually WFA (work from anywhere).   For some, that’s meant casting their gaze towards warm sunny climates such as Spain.  Just imagine shutting your computer lid at the end of the day and going for a swim in your own pool or heading to the beach for sunsets and cocktails.

    You’ll be amazed at what your budget can stretch to in Spain and we’ve been helping clients buy dream Spanish properties for over thirty years.

    Also, retirement to Spain is still hugely popular (regardless of Brexit) and there are lots of great opportunities for holiday homes as well.

    We work with Spanish based property sourcing experts to help you:

    • Understand the current trends in the Spanish property market and where are the up-and-coming locations (both inland and along the coast) where your budget will stretch the most
    • find the most affordable properties in all areas, including popular regions such as the Costa de Sol, Costa Blanca and Murcia.
    • Match your budget with your property needs – you give us the brief and we’ll present you with a shortlist of properties we know you will love.

    Traditional or Modern?

    Whether you are looking for a traditional property or a contemporary new-build, you’re sure to find your ideal property in Spain.  In new-build properties, there’s been an exciting evolution in the design process in recent years with some of the most eye-catching and ‘wow factor’ homes we’ve ever seen coming to the market.  In these exclusive properties, the interior space is as eye-catching as the magnificent views from the terraces and balconies.

    Wallace Quinn offers a high quality, bespoke client experience

    We work with trusted Spanish solicitors to ensure we navigate the differences in Spanish/Scottish conveyancing practices, so that whatever country you are purchasing property in, you get the same high-quality experience we’ve built our reputation on over the last thirty years.

    Wallace Quinn Business Development Manager Margaret McMillan says,

    ‘The property market in Spain has opened up after the pandemic and work has resumed on new-build sites in stunning locations across Spain and there are some great opportunities with older properties.  With the higher sales prices for properties generally here in the UK, you’ll be amazed at what you’ll get for your money in Spain.  If you are serious about buying in Spain, this is the time to do it – we’re seeing some remarkable bargains at the moment, but as the world opens up more and more, the prices will inevitably start to rise.’

    Holiday Homes and Retirement Plans 

    If you’re not looking to make a permanent move to Spain, there are some excellent opportunities for holiday homes.  Imagine having access to a sunny bolthole just two hours flight time from Scotland.  You could wake up to a view of the sea or in a rural mountain retreat.  You could also combine your escapes with a money making venture – holiday lets are very much in demand.

    If you’re ready to take the next step towards a Spanish property adventure, get in touch for an informal chat with Margaret McMillan (margaret@wallacequinn.co.uk)