If an individual’s estate is valued over £325,000 when he or she dies, inheritance tax (“IHT”) will be payable at 40% on the amount by which that figure is exceeded. However, this is subject to various exemptions and reliefs, some of which are more generally known than others – for example, no tax is due on a transfer (either in the lifetime of the individual or on their death) between spouses or registered civil partners.
IHT is payable on your estate, which includes:
- everything of value that you own anywhere in the world when you die (for example, your home, car, jewellery and other possessions, savings and investments etc.); after allowing for
- any outstanding debts you owe; but also including
- the value of any gifts you have made in the last 7 years
However, only about 6% of people who die each year in the UK are affected by IHT and although IHT is usually only paid when you die, there are certain situations where it can be payable in your lifetime, for example, if you set up a trust and transfer assets into it.
For more information follow the links below:
- Inheritance Tax… The Basics
- Trusts... A Quick Guide
- Read our briefing: Inheritance Tax transferrable nil rate band
- Inheritance Tax nil rate band discretionary will trust provisions: the advantages and disadvantages of keeping them in your Wills.