What is Inheritance Tax?
Inheritance Tax (IHT) is a tax applied to the estate of someone who has passed away. This includes everything they owned at the time of their death, such as property, possessions, money, and gifts given within seven years prior to their death. The standard Inheritance Tax rate is 40%.
When is Inheritance Tax Paid?
Inheritance Tax needs to be settled by the personal representatives of the deceased's estate. Ideally, payments should be made by the end of the sixth month after the person's death to avoid any interest charges from HMRC. Sometimes, it might be necessary to sell assets to cover this tax. For assets such as property and shares, you may also have the option to pay the tax in equal annual installments over up to 10 years.
Are There Any Exemptions?
Not all estates are liable for Inheritance Tax. You might not owe any tax if:
- The total value of the estate is below the nil rate band (currently £325,000).
- The estate is left to a surviving spouse or civil partner, in which case no tax is due until the surviving spouse or civil partner passes away.
- The estate includes a family home left to children or grandchildren, which may qualify for an additional residence nil rate band, increasing the non-taxable amount by up to £175,000.
- Assets are left to UK charities, which are exempt from Inheritance Tax.
- The deceased was domiciled outside the UK, so only their UK assets are subject to Inheritance Tax.
How We Can Help
Navigating Inheritance Tax can be complex, especially during a time of bereavement. At Rosalind Watchorn Solicitors, our friendly and knowledgeable team is here to guide you through every step. We can help you determine what Inheritance Tax is due, assist with payment arrangements, and handle all the formalities of submitting the necessary forms.
Get in Touch
If you need assistance with Inheritance Tax or have any questions about managing an estate, don’t hesitate to contact us. We’re here to provide support and ensure everything is handled with care and expertise.
.png)
