The Inheritance Tax is a tax that has been implied in the money or assets which a person leaves behind once they die. In some cases, the tax can also be paid when the person understands that he or she is in their last stage. However, there is no need to worry about Inheritance tax if the assets are passed to the direct partner, a spouse or civil partner. But the procedure needs to be followed with all the applications and documents, only the tax is exempted.
The tax-free IHT allowance is £325,000 for the current financial year. There are fewer chances of it being increased in the coming years. There is also a resident allowance when there can be an addition to the standard nil band and can be applied once the deceased is passes the property, that may have been their residence at one point, to their direct descendants. Children adopted children, stepchildren, grandchildren and even Foster children can be the direct descendants of the property.
The maximum nil rate band keeps the search with £100,000 from April 2017 and increase consistently by £25,000 per annum after that. The nil rate band can be passed on to the spouse or the civil partner.
Inheritance Tax Thresholds and Rates
Not married or in a civil partnership – If you are not married or in a civil partnership and die in an estate that costs more than £325,000 then the IHT of 40% is implied on the total value of the estate above £325,000.
Married or in a civil partnership – In case you are married or in a civil partnership, then they are allowed to pass their assets to each other without having to pay any tax since 2007. The surviving partner gets to use the assets.
Making a gift during the lifetime – Inheritance tax is also payable in case a person makes gifts during their lifetime, especially if they pass away within the time frame of 7 years of giving the gift. This also includes the ones which pass under the residing estate during the time of the death. Here are all the details about the payable gifts –
- Tax-free whenever they were made
- Tax-free due to the timing of the gift
- Taxable themselves but the tax may not be due during the time when the gift was made.
Who is going to pay the Inheritance Tax Bill?
The IHT is supposed to be paid by all the beneficiaries who have received your assets but only if the worth of all the assets are more than £325,000 and passed away within 7 years of making the gifts to them. If they are unable to pay or not willing to, then the amount due will be retrieved from your estate.
We can help you out in case you feel that your life is coming to an end. Our professional agents will do all the necessary tasks which will benefit you and your beneficiaries in the most efficient manner.