Inheritance tax

Inheritance tax is only payable where the estate of the person who died is valued over £325,000. £325,000 is the level set for the 2023 to 2024 tax year, also called the Inheritance Tax threshold. Where an estate is worth at least £325,000, the amount over this is taxed at 40% (not the whole amount, just the amount over this level).

A persons estate is the value of all their possessions and property etc, and includes gifts made during the seven years before their death. There are certain assets which will NOT form part of their estate though, and this can include life assurance in trust for another person, or jointly held assets such as property.

Since October 2007, married couples and civil partners can inherit the unused allowance from their deceased spouse / civil partner.
Currently this can mean a surviving spouse / civil partner can gift up to £650,000 tax free.
Therefore if on the first death, the allowance was not used, then the executors or personal representatives can transfer the first unused portion of the allowance to the surviving spouse or civil partner when they die.

There are many ways to reduce the tax payable, but most of these should be put into place before you die.

Gifting is one option, but there are ways to gift and yet keep control of that investment.

Investing into inheritance tax friendly investments is another option - especially the older you get.

Please ask us for more information.

April 2017 tax changes

If you leave property that you have lived in to your children or grandchildren, then you may also be able to claim a new allowance of £175,000 on top of your personal inheritance tax allowance. This allowance started in April 2017. The allowance is however subject to a few conditions, so please contact us to see if you can claim this new but important allowance.