What is Inheritance Tax?

 

Inheritance Tax is usually paid on an estate when somebody dies. It's also sometimes payable on trusts or gifts made during someone's lifetime. Most estates don't have to pay Inheritance Tax because they're valued at less than the threshold (£325,000 in 2014-15). The tax is payable at 40 per cent on the amount over this threshold or 36 per cent if the estate qualifies for a reduced rate as a result of a charitable donation.

 

Increased threshold for married couples and civil partners Since October 2007, married couples and registered civil partners can effectively increase the threshold on their estate when the second partner dies - to as much as £650,000. Their executors or personal representatives must transfer the first spouse or civil partner's unused Inheritance Tax threshold or 'nil rate band' to the second spouse or civil partner when they die.

 

Who is responsible for paying Inheritance Tax?

 

Inheritance Tax is payable by different people in different circumstances. Typically, the executor or personal representative pays it using funds from the deceased's estate.The trustees are usually responsible for paying Inheritance Tax on assets in, or transferred into, a trust. Sometimes people who have received gifts, or who inherit from the deceased, have to pay Inheritance Tax - but this is not common.

 

Valuing an estate to see if Inheritance Tax is due

 

To find out if Inheritance Tax is due on an estate, you must first value the estate. This means adding up the value of all the assets in the estate - such as a house, possessions, money and investments - and deducting any debts the deceased may have owed, including household bills and funeral expenses.An estate also includes the deceased's share of any jointly owned assets and the value of any assets held in trust.You should also review any gifts that the deceased may have made in their lifetime to see if they are exempt, and if they aren't exempt, include them in the overall value of the estate

 

 

By effectively planning for IHT mitigation, in the UK there are various financial instruments to help avoid or reduce your tax bill.

 

Some aspects of Inheritance tax planning are not regulated by the Financial Conduct Authority

 

If this is an area you wish to take advice upon please contact us

 

 

 

Decisions should not be based solely on the content of this website and individual advice should be sought first.

Regulations,levels and bases of taxation are subject to change.

The content is aimed at UK residents or residents of MIFID countries.Tax Advice is not regulated by the Financial Conduct Authority.

 

Trent River Capital Limited is registered in England & Wales. Company number: 7073799.

Trent River Capital Ltd is authorised & regulated by the Financial Conduct Authority (FCA) under number 627974. You can check this on the Financial Services Register by visiting the website http://www.fca.org.uk/register/ or by contacting the FCA at 25 the North Colonnade, Canary Wharf, London.E14 5HS or telephone 0800 111 6768