When you pass away, your estate may be required to pay Inheritance Tax. This is a tax on the money, possessions and other property you own when you die and also other assets including certain gifts made during your lifetime.
Everyone has an allowance that they can leave tax free. This is known as the ‘Nil Rate Band’ which is currently fixed at three hundred and twenty five thousand pounds (£325, 000).
Generally speaking, if your net estate is worth less than £325,000 at the time of your death, usually no tax will be payable. If your net estate is worth more than £325,000 at the time of your death then normally tax is paid on the surplus at the rate of 40%.
This is subject to various exemptions and reliefs. For example if you have a spouse or civil partner, inheritance tax would not be paid on anything they inherit from your estate. Your spouse or civil partner could then use the percentage of any remaining allowance from your estate that may not have been used when they pass away. In simple terms, this generally means that if you are a married couple or in a civil partnership with a combined estate worth less than £650,000 and you leave everything to each other on the first death, Inheritance Tax will not be an issue.
Everyone has an allowance that they can leave tax free. This is known as the ‘Nil Rate Band’ which is currently fixed at three hundred and twenty five thousand pounds (£325, 000).Generally speaking, if your net estate is worth less than £325,000 at the time of your death, usually no tax will be payable. If your net estate is worth more than £325,000 at the time of your death then normally tax is paid on the surplus at the rate of 40%.
This is subject to various exemptions and reliefs. For example if you have a spouse or civil partner, inheritance tax would not be paid on anything they inherit from your estate. Your spouse or civil partner could then use the percentage of any remaining allowance from your estate that may not have been used when they pass away. In simple terms, this generally means that if you are a married couple or in a civil partnership with a combined estate worth less than £650,000 and you leave everything to each other on the first death, Inheritance Tax will not be an issue.
