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What You Need to Know About Inheritance Tax

What is the threshold for an increased threshold?

Married couples or registered civil partners can increase their estate threshold when the second spouse dies. This is up to a maximum of 650,000 for 2011/12.

The Inheritance Tax threshold, or "nil rate band", must be claimed by the personal representatives so it can be applied to the estate of the second spouse. You can get all the information about inheritance taxes at https://inheritance-tax.co.uk/area/inheritance-tax/. 

Who pays the tax?

Different people may have to pay inheritance tax depending on their circumstances. It is usually paid by personal representatives using funds from the estate. Trustees are responsible for Inheritance tax on assets that have been transferred to or placed in Trusts. However, it is not uncommon for people to be liable for Inheritance Tax on gifts or inheritances from the deceased.

How can You determine if Inheritance tax is payable?

First, evaluate the estate to determine if Tax is due. This is i.e. Calculate the total value of all assets at the time of death, including property, possessions, and money, and subtract any debts owed including household bills.

It is important to review any gifts made by the deceased during their lifetime and determine if they are exempt. If not, they should be added to the estate's overall value.

What are the exemptions and reliefs?

Even if your estate exceeds the threshold, sometimes you can transfer assets without paying tax. There are several exemptions and reliefs available. For example, charity exemption.

Any gifts that you make to "qualifying" charities during your lifetime, or in your Will, will be exempted from inheritance tax. The Chancellor announced a 10% discount in Inheritance tax for individuals who leave at least 10% of their net estate to registered charities.