[vc_row full_width=”stretch_row” lg_spacing=”padding_top:115;padding_bottom:115″ background_image=”1393″ el_id=”section-services” background_position=”center center”][vc_column][tm_heading custom_google_font=”” text_transform=”uppercase” align=”center” text_color=”custom” custom_text_color=”#7a8a9e” text=”Our Services” font_size=”lg:14″ letter_spacing=”3px”][tm_spacer size=”lg:20″][tm_heading custom_google_font=”” align=”center” text=”What Is Inheritance Tax?” max_width=”770px” font_size=”lg:36″][tm_spacer size=”lg:30″][tm_heading tag=”div” custom_google_font=”” align=”center” text=”Inheritance Tax is a tax that must be paid on the estate of someone who\u2019s died. \u2018Estate\u2019 refers to any property, money and possessions that belonged to that person.” font_size=”lg:18″ max_width=”770px”][tm_spacer size=”lg:30″][vc_column_text]<\/p>\n
Inheritance Tax (IHT) is a topic that worries many people. The uncertainty of exactly what will happen to a person\u2019s assets after they pass away is obviously a big concern. But not everyone needs to pay Inheritance Tax when they die as only a small percentage of estates are worth enough to incur a charge.<\/p>\n
Here is our comprehensive guide on how Inheritance Tax is calculated, after reading you may realise you are liable to pay IHT and want to factor this into your will<\/a>. [\/vc_column_text][tm_spacer size=”lg:70″][\/vc_column][\/vc_row][vc_row full_width=”stretch_row” background_color=”custom” custom_background_color=”#eeeeee” lg_spacing=”padding_bottom:60″][vc_column][vc_row_inner lg_spacing=”margin_top:-135″][vc_column_inner width=”1\/3″][tm_box_icon style=”7″ align=”center” button_color=”secondary” background_color=”primary” image=”353″ heading=”Making A Will” text=”Making a will and setting out your wishes for end of life means you can rest assured your final wishes will be adhered to. Save your family stress and worry and give them time to grieve.” button=”url:%2Fwhat-is-a-will%2F|title:More%20Details||” link=”url:%2Fwhat-is-a-will%2F|||”][\/vc_column_inner][vc_column_inner width=”1\/3″][tm_box_icon style=”7″ align=”center” button_color=”secondary” background_color=”primary” image=”395″ heading=”Wealth Management” text=”Pre-planning and organising your finances, assets and estate during life can minimise exposure and risk in death. This will allow you to enjoy and make the most of your retirement.” button=”url:%2Fwhat-is-wealth-management-estate-planning%2F|title:More%20Details||” link=”url:%2Fwhat-is-wealth-management-estate-planning%2F|||”][\/vc_column_inner][vc_column_inner width=”1\/3″][tm_box_icon style=”7″ align=”center” button_color=”secondary” background_color=”primary” overlay_background=”primary” overlay_opacity=”80″ image=”80″ heading=”Trusts” text=”Making a trust is one way of minimising your potential Inheritance Tax bill. Find out how a Trust could be beneficial to you and your family. How to set one up and the cost implications.” button=”url:%2Fwhat-is-a-trust%2F|title:More%20Details||” link=”url:%2Fwhat-is-a-trust%2F|||”][\/vc_column_inner][\/vc_row_inner][vc_column_text]<\/p>\n Don’t hesitate, contact us if you are unsure of the service you need or just need some help and advice.\u00a0Contact Us<\/span><\/a><\/p>\n [\/vc_column_text][\/vc_column][\/vc_row][vc_row lg_spacing=”margin_top:60;margin_bottom:60″][vc_column][vc_row_inner][vc_column_inner][tm_heading custom_google_font=”” align=”center” text=”Who Pays The Inheritance Tax” font_size=”lg:36″][tm_spacer size=”lg:26″][vc_column_text]Funds are usually taken straight from your estate and paid to HM Revenue and Customs (HMRC). This is done by the person \u2018executor\u2019 of the will<\/a>, presuming there is one rather than your beneficiaries having to pay tax on things they inherit<\/a>. This is not to say that they won\u2019t have related taxes to pay.<\/p>\n Sometimes the person who died has set aside money specifically to pay IHT. This can be done through a \u2018whole-of-life insurance policy\u2019.<\/p>\n This kind of insurance policy allows you to gift assets to loved ones other than spouses when there is a risk that if you were to die within 7 years, a large tax bill would be received and owed by the receiver. Again, premiums are usually fixed at the start of the policy, which will be set to last a certain amount of time. The policy only pays out if you die within the stated period. After that period the policy expires.<\/p>\n It is true that payments from a life insurance policy could be subject to IHT, however, by writing the policy \u2018in Trust\u2019, IHT should be avoided. This could help to avoid the probate process<\/a>.<\/p>\n Once IHT and liabilities have been paid, the executor or administrator can distribute the remaining estate.<\/p>\n As mentioned above, the amount of Inheritance Tax you will pay is based on the value of your assets\/estate<\/a> (the total value of everything you possess) To value your estate you must:<\/p>\n You must make a record of how each asset was valued as HMRC can ask to see these records for up to 20 years after Inheritance Tax has been paid. This is important and easily overlooked. Also remember to keep records of how each valuation was made, such as estate agent\u2019s\/jewellers\/ antique dealers valuation.<\/p>\n Assets can include items such as property, money in a bank, land, jewellery, vehicles, stocks and shares, and jointly owned assets. The Government<\/a> website can give you a full list of what is classed as an asset. Gifts made within the seven years prior to death also need to be included. These could be cash or property; any other assets. You\u2019ll also need to include any gifts given before this period if the person who died continued to benefit from the gift (such as living in a gifted house for example). These are known as \u2018gifts with reservations of benefit\u2019<\/strong>.<\/p>\n Debts and liabilities such as credit cards, household bills, mortgages and other loans) reduce the value of the estate, though any costs incurred after death, including solicitor\/probate fees<\/a>, cannot be deducted from the estate\u2019s value (for IHT purposes).[\/vc_column_text][\/vc_column_inner][\/vc_row_inner][\/vc_column][\/vc_row][vc_row lg_spacing=”margin_top:60;margin_bottom:60″][vc_column][vc_row_inner][vc_column_inner][tm_heading custom_google_font=”” align=”center” text=”Inheritance Tax Rates” max_width=”470px” font_size=”lg:36″][tm_spacer size=”lg:26″][tm_heading tag=”p” custom_google_font=”” align=”center” text=”The standard Inheritance Tax rate is 40%. This means you are charged 40% on the part of your estate that\u2019s above the threshold.”][tm_icon icon_type=”fontawesome5″ icon_fontawesome5=”far fa-dot-circle” align=”center” icon_color=”primary” lg_spacing=”margin_bottom:20″][tm_heading tag=”p” custom_google_font=”” align=”center” text=”For Example: Your estate is valued at \u00a3500,000 and your tax-free threshold is \u00a3325,000. This means you will be charged 40% of \u00a3175,000 (\u00a3500,000 minus \u00a3325,000).”][tm_icon icon_type=”fontawesome5″ icon_fontawesome5=”far fa-dot-circle” align=”center” icon_color=”primary” lg_spacing=”margin_bottom:20″][tm_heading tag=”p” custom_google_font=”” align=”center” text=”If you leave 10% or more of the \u2018net value\u2019 of your estate to charity, a reduced rate of 36% will apply on some assets.”][\/vc_column_inner][\/vc_row_inner][\/vc_column][\/vc_row][vc_row full_width=”stretch_row_content_no_spaces” equal_height=”yes”][vc_column offset=”vc_col-lg-6″][vc_row_inner lg_spacing=”padding_top:100;padding_right:120;padding_bottom:100;padding_left:120″ md_spacing=”padding_right:80;padding_left:80″ sm_spacing=”padding_right:50;padding_left:50″ xs_spacing=”padding_right:30;padding_left:30″][vc_column_inner][tm_heading custom_google_font=”” icon_type=”fontawesome5″ icon_fontawesome5=”far fa-ban” icon_color=”primary” text=”Exemptions” font_size=”lg:36″ icon_font_size=”lg:54″][tm_spacer size=”lg:15″][tm_heading tag=”div” custom_google_font=”” text_color=”custom” custom_text_color=”#ffffff” text=”Let us explain more clearly what is meant by \u201cgifts\u201d.”][vc_column_text]First of all, when you die, assets left to your spouse\/civil partner, provided they live in the UK, are exempt from inheritance tax. Furthermore, your partner\u2019s inheritance tax allowance will increase by the amount that you didn\u2019t use, meaning together a married couple or a civil partnership can leave \u00a3900,000 without it being taxed.<\/p>\n There are other instances when inheritance tax is not charged. Some people in what are considered \u2018risky\u2019 roles are exempt from paying inheritance tax if their death occurs during active service. These roles include the armed forces personnel, police, firefighters and paramedics, plus humanitarian aid workers.<\/p>\n The exemption also applies if a person who was injured on active service has their death hastened by the injury, even if they\u2019re no longer in active service.<\/p>\n Other factors to consider when calculating Inheritance Tax:<\/p>\n Former Chancellor of the Exchequer George Osborne revealed in 2015 that he\u2019d scrap the tax when parents or grandparents pass on a home worth up to \u00a31 million, \u00a3500,000 for single people. This is fully effective from tax year 2020\/21.[\/vc_column_text][\/vc_column_inner][\/vc_row_inner][\/vc_column][vc_column background_color=”primary” offset=”vc_col-lg-6″][vc_row_inner equal_height=”yes” background_color=”secondary” gutter=”lg:0″ lg_spacing=”padding_top:100;padding_right:120;padding_bottom:100;padding_left:120″ md_spacing=”padding_right:80;padding_left:80″ sm_spacing=”padding_right:50;padding_left:50″][vc_column_inner background_color=”secondary”][tm_heading custom_google_font=”” text_color=”custom” custom_text_color=”#ffffff” icon_type=”fontawesome5″ icon_fontawesome5=”far fa-gift” icon_color=”custom” custom_icon_color=”#ffffff” text=”Gifts” font_size=”lg:36″ icon_font_size=”lg:56″][tm_spacer size=”lg:26″][tm_heading tag=”div” custom_google_font=”” text_color=”custom” custom_text_color=”#ffffff” text=”Let us explain more clearly what is meant by \u201cgifts\u201d.”][vc_column_text el_class=”white”]Some high value gifts you make while you\u2019re alive could possibly be taxed after your death, depending on when you gave the gif<\/a>t. There\u2019s also no Inheritance Tax to pay on gifts between spouses or civil partners whenever they may have occurred, however, gifts to other people will most likely count towards the value of your estate. Essentially, what this means is that Inheritance tax will be charged if you give away more than \u00a3325,000 in the 7 years before your death.<\/p>\n \u00a33,000 worth of gifts can be given away each tax year (6 April to 5 April) without being considered as part of your estate. This is called your \u2018annual exemption\u2019. Any unused annual exemption can be carried forward to the next year, a rollover so to speak \u2013 but only for one year. More than one of these exemptions can be used towards the same person.<\/p>\n If you make large gifts, the beneficiaries could take out life insurance against the potential impending inheritance tax bill. Most gifts into trust are now subject to inheritance tax even if made during your lifetime and you would need specialist advice in order to try and navigate your way around this. Smaller gifts of up to \u00a3250 per person can be given freely throughout the year as long as you have not used any other exemption on the same person.<\/p>\n Gifts made 3 to 7 years before your death are taxed on a sliding scale known as \u2018taper relief\u2019.\u2018Taper relief\u2019 might mean the Inheritance Tax charged on the gift is less than 40%.<\/p>\n If your estate includes a farm or woodland you should contact the Inheritance Tax and probate helpline<\/a> about Agricultural Relief.[\/vc_column_text][\/vc_column_inner][\/vc_row_inner][\/vc_column][\/vc_row][vc_row full_width=”stretch_row” content_placement=”middle” background_color=”primary”][vc_column][vc_row_inner equal_height=”yes” background_color=”secondary” gutter=”lg:0″][vc_column_inner background_color=”primary” lg_spacing=”padding_top:80;padding_right:60;padding_bottom:77;padding_left:60″][tm_heading custom_google_font=”” text_color=”custom” custom_text_color=”#ffffff” text=”Business Relief” font_size=”lg:36″][tm_spacer size=”lg:26″][tm_heading tag=”div” custom_google_font=”” text_color=”custom” custom_text_color=”#ffffff” text=”Business Relief enables certain assets to be exempt from Inheritance Tax or with a reduced bill at least. All it means is that ownership of or shares in a business is included in the estate for Inheritance Tax purposes.”][vc_column_text]<\/p>\n You can get 100% Business Relief on a business or interest in a business or shares in an unlisted company. The deceased must have owned the business or the assets for at least 2 years before they died for business relief<\/a> to apply.<\/p>\n [\/vc_column_text][\/vc_column_inner][\/vc_row_inner][\/vc_column][\/vc_row][vc_row full_width=”stretch_row” content_placement=”middle”][vc_column][vc_row_inner equal_height=”yes” gutter=”lg:0″][vc_column_inner lg_spacing=”padding_top:80;padding_right:60;padding_bottom:77;padding_left:60″][tm_heading custom_google_font=”” text_color=”primary” text=”When is Inheritance Tax Paid?” font_size=”lg:36″][tm_spacer size=”lg:26″][tm_heading tag=”div” custom_google_font=”” text=”Inheritance Tax must be paid within six months of the person\u2019s death. If it is not HMRC will start charging interest.”][tm_spacer size=”lg:26″][vc_column_text]The person or people who are acting as executors can choose to pay the tax on certain assets by instalment. These can be made over ten years but the amount that remains outstanding will get charged interest. If the asset is sold before all the IHT is paid, the executors<\/a> must pay the balance owed at this point.<\/p>\n If your estate is to incur IHT, it is wise for your executor to pay as much as possible within the first six months of death, even if they haven\u2019t finished valuing the estate, known as payment on account. This will limit the interest that could be charged.<\/p>\n If the executor or administrator is planning to pay the tax from their own account (maybe because assets have not been sold yet), they can claim it back from the estate. HMRC can always refund any overpayment once probate has been granted.<\/p>\n If you have been appointed executor or administrator of the estate you must complete and submit an account of the estate within a year of death to avoid penalties. An IHT reference number<\/a> must be obtained at least three weeks before a payment is made. This can be done by post or online. Your estate might also incur:<\/p>\n
\nWe aim to clarify some of the issues that may be concerning you, including how to work out what you will have to pay, when to pay it and a few ways in which you can reduce this tax.<\/p>\nWhole of life policy<\/h5>\n
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Term insurance policy<\/h5>\n
How to value the estate<\/h5>\n
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\nEach tax year, you can also give away:<\/p>\n\n
\nYou can get 50% Business Relief on:<\/p>\n\n
\n[\/vc_column_text][\/vc_column_inner][\/vc_row_inner][\/vc_column][\/vc_row][vc_row full_width=”stretch_row” overlay_background=”primary” overlay_opacity=”16″ lg_spacing=”padding_top:110;padding_bottom:110″ background_image=”185″][vc_column][vc_row_inner background_color=”custom” lg_spacing=”margin_right:0;margin_left:0;padding_right:70;padding_left:70″ custom_background_color=”#ffffff” sm_spacing=”padding_right:30;padding_left:30″ xs_spacing=”padding_right:15;padding_left:15″][vc_column_inner][tm_spacer size=”lg:85″][tm_heading style=”with-separator-1″ custom_google_font=”” text_transform=”uppercase” align=”center” text_color=”primary” text=”OUR COMMITMENTS” font_size=”lg:14″ letter_spacing=”1px”][tm_spacer size=”lg:25″][tm_heading custom_google_font=”” align=”center” text=”What other taxes can be taken from my estate?” max_width=”600px” font_size=”sm:32;lg:36″][tm_spacer size=”lg:70″][\/vc_column_inner][\/vc_row_inner][vc_row_inner background_color=”custom” lg_spacing=”margin_right:0;margin_left:0;padding_right:70;padding_bottom:40;padding_left:70″ custom_background_color=”#ffffff” sm_spacing=”padding_right:30;padding_left:30″ xs_spacing=”padding_right:15;padding_left:15″][vc_column_inner][vc_column_text]<\/p>\n