Inheritance Tax (IHT) is due when a deceased person’s total money, property and possessions (their estate) is worth more than £325,000 when they die.
This is the current inheritance tax threshold that increases from time to time to take into account inflation. The rate of Inheritance Tax is 40% that is paid on anything above the threshold.
The rate may be reduced to 36% if more than 10% of the estate is left to charity.
If you are married and you and your spouse have total assets of less than £650,000 (ie you have an allowance of £325,000 each) you may not need to take any special action regarding tax planning for the future. However with ballooning property prices, far more people find the value of their home pushes them over the IHT threshold. If you are in this position and seek to minimise the tax you will pay upon the death of the sole survivor, paying for good professional legal or tax advice can only be recommended.
Independent Financial Advisers are a good place to start, however if you have a complex estate you may need the help of a solicitor or tax accountant for more specialised considerations. Preferably find one who is a member of the Society of Trust and Estate Practitioners, please see the STEP and Chartered Institute Of Taxation websites.
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Good sources of reference about inheritance tax:
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