The Inheritance Tax Threshold

In the UK, depending on the value of your estate when you pass away, you will have to pay a
different amount of inheritance tax. If your estate is worth more than the inheritance tax
threshold you will pay inheritance tax. Your estate is all your capital, possessions and
property.

The current inheritance tax threshold is £325,000. If your estate is worth more than this
amount you will automatically pay inheritance tax at a rate of 40%. However, you can reduce this
amount by ten per cent to 36% if you have given to charity. You must give away 10% of your total
estate to a qualifying charity to be able to be given this reduction. 

If you have to pay inheritance tax, this responsibility will usually lie with the executor of the
Will. They will have to ensure that the tax is paid directly to Her Majesty's Revenue and Customs
(HMRC) within 6 months from the time that the individual passed away. These 6 months will be
calculated from the end of the month in which they died. If you do not do this you will begin to
pay interest on the amount, something you definitely wish to avoid as it can become very
expensive. 

When you are calculated the amount the estate is worth, you will have to make sure that you
follow the guidelines given by HMRC. The following items must all be included in the valuation:

- Vehicles
- Houses
- Stocks and shares
- Land
- Savings
- Money
- Life Insurance payments
- Items in the house - furniture, jewellery

You must include everything in the valuation, including all items which were gifted by the
individual within the 7 years before they passed away. This is so people cannot reduce the value
of their estate to avoid paying inheritance tax. However, you do take off any costs you are going
to incur to the estate when repaying any outstanding bills and pay for the funeral. 

If the valuation is going to take you more than 6 months, you can pay inheritance tax on an
estimated value. This is a good decision to make as it will prevent you having to pay interest on
you outstanding bill and you will be refunded if you overpay on your tax.

If you need any help with understanding the law surrounding inheritance tax and are interested in
inheritance tax planning, you should contact a solicitor who specialises in inheritance tax issues
today.
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Thomson Wilson Pattinson can help you with Inheritance Tax Planning
http://www.twpsolicitors.com/uk-inheritance-tax-planning-advice/
Looking for Cumbria Solicitors? http://www.twpsolicitors.com/

Posted by J. Randall Frier