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| Inheritance Tax (IHT) is only due if the value of the estate is above the IHT threshold of £300,000.
A persons estate includes the following:
| Assets in the sole name of the deceased
| | The deceased's share of any jointly owned assets
| | Assets held in a trust in which the deceased had an immediate post-death interest
| | Any 'nominated' assets
| | Any assets they have given away, but kept an interest in
| The value of an alternatively secured pension fund (ASP)
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The total of all these assets is added to the chargeable value of any gifts made within seven years of the death to work out the amount on which tax is charged.
Gifting
Although some gifts are exempt from IHT, many others are not - and attract IHT on a sliding scale depending on how long ago they were given.
Those which are exempt include gifts of up to £250 per person per year, as well as wedding gifts of up to £5,000 for your children or to anyone else of up to £1,000, plus all gifts to political parties and charities.
If you have complicated tax affairs, it is important to seek advice from a qualified accountant / financial advisor to ensure appropriate tax planning.
Who pays the IHT due on an estate?
The personal representatives are liable to pay any IHT due on an estate. These are persons who administer the deceased person's estate. If there is a will and the personal representative is named in it they are known as an executor. If there is no will, or they are appointed by the court, they are known as an administrator.
How Is The Tax Calculated?
Tax is calcualted at 40% of the total value of the estate after the £300,000 threshold and after any allowable deductions. Take a look at this EXAMPLE CALCULATION
Paying the Tax
If inheritance tax is due on an estate, and you need to fill in a full account, you can download the forms and notes from HERE
Is it an excepted estate?
An excepted estate is an estate where no Inheritance Tax (IHT) is due and a full inheritance tax account is not required. There are three types of excepted estate
Low value estates
Exempt estates
Foreign domiciliaries
For further guidance on Inheritance Tax see the HM Revenue & Customs CUSTOMER GUIDE TO IHT |
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