Inland Revenue inheritance tax is a matter of concern for an increasing segment of the UK population. Although Inland Revenue inheritance tax was originally imposed as a tax on the very rich and wealthy, the tax threshold above (which you are liable tax on your assets at death) has increased at a slower rate than the rising house prices. As property is a significant portion of the estate of many people when they die, this means that more and more people are edging over the nil-rate band of £312,000 into an estate of greater worth that will be taxed.
Inland Revenue inheritance tax is levied as follows:
- A nil-rate band of up to £312,000 of assets (including property, a proportion of shared assets, etc.) is exempt from tax.
- The value of the estate in excess of this band is taxed at 40% - for example, £100,000 of a £400,000 estate would be taxed, charging £40,000.
- Gifts given within the last seven years are also taxed, although there are numerous exemptions and potentially exempt transfers available to help reduce this burden under certain circumstances.
- Gifts given over seven years ago are tax exempt, unless the donor still benefits from the gift (such as continuing to live in a house that was given to children, without paying market value rent).
- A spouse or civil partner can inherit the estate without paying any inheritance tax.
Inland Revenue inheritance tax is a complex financial matter and expert advice from professionals can help you to minimise its impact on the legacy you leave to your family. Fill out our short enquiry form and we will put you in touch with qualified UK financial consultants, who can offer you a no-obligation free consultation.