Inheritance Tax
Inheritance Tax is a tax paid on the value of those assets which are passed from one person to another upon death.
The value of those assets is determined as being a person's estate, including:
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everything owned in their name i.e. property; money, savings and the value of investments;
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the share of anything owned jointly; and
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certain gifts made in the previous seven years
Against this total value is set everything that the deceased person owed, such as any outstanding mortgages or loans, unpaid bills and other sums due, as well as funeral expenses.
Under the current tax rules any assets passing to a spouse, registered civil partner or to charity on death are free of Inheritance Tax. An individual can also leave assets worth up to £312,000 (2008/09) to someone who is not a spouse, civil partner or charity without an inheritance tax liability. When the value of assets passing to someone who is not a spouse, civil partner or charity exceeds £312,000 the value over £312,000 will be subject to inheritance tax at the rate of 40%.
The portion of £312,000 which can pass to a non spouse tax free is known as the nil rate band.
There are a number of steps you can take to mitigate or reduce your potential Inheritance Tax liability, including:
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Ensure you have an up to date Will which has been written correctly to ensure those who you wish to benefit do so
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Transfer assets through prudent use of lifetime gifts
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Establish a trust when one of a couple dies
Our experienced Private Client Team can review your circumstances with you and advise you on the most appropriate steps for you. We can help you put in place an effective Will that specifically meets your requirements as well as setting up any arrangements that may be advisable to protect your assets and to mitigate any potential inheritance tax liability.
