The inheritance tax allowance is a band of estate value below which you will be charged no tax on assets in the event of your death. Inheritance tax is affecting an increasing number of UK residents as house prices rise and increase the worth of property assets, and so the tax can have a significant impact on the inheritance you intend to leave to your family. The inheritance tax allowance has not risen in line with these property value increases in recent years, forcing more people over the edge of the nil-rate band.
The inheritance tax allowance works as follows:
- The first £325,000 as at 2012/13 of assets in your estate is free from tax. This is your inheritance tax allowance, the nil-rate band.
- Assets in excess of the nil-rate band are taxable at a 40% rate.
- Importantly, gifts and asset transfers from the seven years leading up to your death can count towards the value of your estate.
- There are many exemptions that can help reduce the potentially taxable value of your estate, such as annual gift exemptions of £3,000 per year for the seven years leading up to your death.
For more inheritance tax allowance information, and for professional advice from qualified experts, you can fill out our online form to get in touch with UK financial consultants who are offering a free and no obligation first consultation.