Royal Succession and Inheritance Tax

As the world mourns our most long-standing monarch, many have questioned whether the Queen’s estate will indeed be taxable, and the wealth depleted. Our private client Solicitor, Emma Brice, advises further on this interesting and topical question. 

Queen visits Bonnyrigg in 1961
[Picture: Queen Elizabeth II and the Duke of Edinburgh visit Bonnyrigg High Street in 1961, when Neilsons’ office was a sweet shop!]

The Queen holds sovereign immunity meaning that British laws do not apply to the Crown unless expressly codified in Acts of Parliament. The notion of sovereign immunity is customary and lies in doctrine and convention, rather than statute, and there is no law setting out the rules underpinning the concept. HMRC (now known as His Majesty’s Revenue and Customs) states that sovereign immunity has its origins in a general principle of International Law that one Sovereign should not subject another to its municipal laws. 

It was agreed in 1993 by HM Queen Elizabeth II and former Prime Minister John Major that there would be no duties paid upon the succession of her estate. The rule was thought to be introduced to protect against the royal family’s assets being wiped out if two monarchs were to die simultaneously or within a short period of time.  

If the Queen’s estate did not benefit from sovereign immunity, the standard Inheritance Tax is chargeable at 40%.  

We do not propose to enter into the current debate on whether the current law is reasonable or not but instead take this opportunity of explaining how IHT affects us generally. 

For those of us who are not Monarchs, UK citizens receive a nil rate band of £325,000 where no IHT is payable and any estate over this amount will be subject to the 40% charge. There are however reliefs which individuals may be able to claim (if for example they are married or leaving their property to a direct descendant) and we will be happy to discuss these in detail if you wish.

It is always prudent to discuss Inheritance Tax with a professional as soon as possible so that tax planning measures can be implemented to minimise any Inheritance Tax charges. Some exemptions only apply after some years have passed so it is best to start planning sooner rather than later. 

If you would like further information or would like to discuss your own Inheritance Tax position and options for estate planning, please do not hesitate to contact Emma Brice by email or telephone on 0131 556 5522. You can also book an appointment online via the link below. 

Book a free initial telephone consultation with Neilsons here

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