Your Will and Brexit
6th November, 2023
You may well be truly fed up of hearing about Brexit and assume, as there's little about it in the headlines at present, that there aren't any important changes being made.
This year, however, two such changes have been made and, if they affect you, the impact may well be significant.
The Spring Budget and the Finance Act 2023 have seen the government start to row back on two valuable inheritance tax reliefs which had previously been opened up to include EEA countries namely the Charity exemption and Agricultural Property Relief.
The Charity exemption gives 100% inheritance tax relief to money going to charities and, combine this with gifts to Charity of 10% of your net estate and your estate could be eligible for a reduced rate of inheritance tax of 36%. A valuable reduction. To qualify your charity previously could have been a Charity subject to control of the High Court (England and Wales), the Court of Succession (in Scotland), the High Court (of Northern Ireland) or crucially, a corresponding court in another EEA state. There is now no allowance for a Charity subject to the control of a corresponding court in an EEA state. This means that if you have non UK charities named in your Will they are unlikely to get the 100% charity exemption and, if you were relying on this to get you the 36% rate of inheritance tax, this could be a costly legacy to leave in your Will.
Agricultural property relief is also a valuable exemption. It allows you to claim up to 100% relief from inheritance tax on agricultural land. This used to include agricultural land in EEA states. Following the spring budget this will no longer be the case from 6 April 2024. This means anyone with agricultural land in another European country could find their estate will be paying 40% inheritance tax on its value.
If either of these changes affect you then there may be things we can do to help you mitigate the loss of the relief. In any event, it is a good idea to regularly review your Will and succession planning to keep up with the ever changing tax playing field and changes within your own family and assets.
Please note that this briefing is designed to be informative, not advisory and represents our understanding of English law and practice as at the date indicated. We would always recommend that you should seek specific guidance on any particular legal issue.
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