How do I know if I need to pay inheritance tax?
Whether an estate is liable for inheritance tax will depend on the value of the Estate and, in some cases, gifts that were made by the deceased.
If the value of the deceased’s Estate is below £325,000, there will normally be no inheritance tax to pay. Likewise, if you leave everything above the £325,000 threshold to a charity, your spouse or civil partner, or a community amateur sports club, again there will normally be no tax payable.
In addition, if you leave your home to your direct descendants, including adopted, foster and step children, your inheritance tax threshold could increase to £500,000.
If your spouse died leaving everything to you, on your death, your Executors may be able to claim your spouse’s unused nil rate band and residence nil rate band. Therefore, your Estate could be worth up to £1,000,000 before any inheritance tax would be payable.
If your Estate is above any of these amounts (depending on whether you are a single person or married/in a civil partnership), you could be liable to pay inheritance tax of 40% on anything above your threshold. For example, if you are a single person, leaving everything to your child, and your estate is worth £600,000, the first £500,000 could be free from inheritance tax. Your Executors would therefore pay inheritance tax on the remaining £100,000 at a rate of 40%, totalling £40,000.
Obviously, there may be other reliefs or exemptions available to you, and this is why it is always advisable to seek legal advice about your Estate, when you are making a Will. If you need advice about inheritance tax and how much you could expect to pay, our expert team of Wills, Trusts, Tax and Probate solicitors are here to help. Contact our team at your local office, or email firstname.lastname@example.org.
For more information about Inheritance tax, visit gov.uk.