Inheritance Tax Planning

What is inheritance tax?

Inheritance Tax is a tax on the estate (the property, money and possessions) of someone who’s died.

There’s normally no Inheritance Tax to pay if either:

  • the value of your estate is below the £325,000 threshold
  • you leave everything above the £325,000 threshold to your spouse, civil partner, a charity or a community amateur sports club

If the estate’s value is below the threshold you’ll still need to report it to HMRC.

If you give away your home to your children (including adopted, foster or stepchildren) or grandchildren your threshold can increase to £500,000.

If you’re married or in a civil partnership and your estate is worth less than your threshold, any unused threshold can be added to your partner’s threshold when you die. This means their threshold can be as much as £1 million.

Inheritance Tax rates

The standard Inheritance Tax rate is 40%. It’s only charged on the part of your estate that’s above the threshold.

Example Your estate is worth £500,000 and your tax-free threshold is £325,000. The Inheritance Tax charged will be 40% of £175,000 (£500,000 minus £325,000).

Why do I need appropriate tax planning?

With the use of a valid Will and appropriate trusts, you will be able to ensure that the correct amount of inheritance tax is paid and not over paid.

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Here’s the legal bit..

Please note that the information on this website is referenced from and accredited to the UK Government website and may change in accordance to updates of relevant laws and acts associated with the topics included.

The information provided on this website is only to be used as reference and an example.

We do our best to provide correct and up to date information and advice to our valued client and visitors however it is your sole responsibility to confirm these details with the relevant parties and do your own research prior to any engagement.

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