You may be thinking about the legacy you will leave to your family and children once you have passed away, and be looking to have inheritance tax explained so you can get a good understanding of the issue that will affect your ability to provide for your loved ones after death.
Inheritance tax is a tax levied by the government on the estate of a deceased individual – a final chance for the taxman to get at your money. After any remaining debts and loans have been accounted for from the assets of your estate, the remaining value is assessed to see whether it is subject to the tax.
Inheritance tax is applied as follows:
- The first £312,000 of the estate is the nil-rate band and is not taxed. However, rising housing prices are causing more estates to push over the nil-rate band and become liable for taxation.
- The worth of the estate in excess of the nil-rate band is taxed at a 40% rate.
- There are many exemptions and special conditions that affect the taxable value of the estate, and it is worth getting professional advice on your specific situation to help you best understand and utilise these.
Importantly, gifts made within the seven years preceding your death can also be subject to inheritance tax, so it is very important to start planning in your later years to avoid any unnecessary taxation.
Fill out our online enquiry form for a free first consultation from qualified UK experts. It is a no-obligation consultation and will greatly help with getting inheritance tax explained.