Inheritance Tax is paid if a person’s estate (their property, money and possessions) is worth more than £325,000 when they die. This is called the ‘Inheritance Tax threshold’. The rate of Inheritance Tax is 40% on anything above the threshold. The rate may be reduced to 36% if 10% or more of the estate is left to charity.
At Tax Compute we will work out how much the estate is worth to find out if the estate needs to pay Inheritance Tax. We can then advise on areas of Tax Planning that can significantly reduce Inheritance Tax or in some cases avoid it legally altogether. What is important is that you contact us in good time so that we can advise on the most appropriate tax planning for you.
Paying Inheritance Tax
- The Executor of the will of the estate pays Inheritance Tax using funds from the estate.
- The Executor of the will of an estate usually has to pay Inheritance Tax by the end of the sixth month after the person died. After this the estate has to pay interest.
- You can pay Inheritance Tax in instalments over 10 years on assets that may take time to sell, e.g. property.
- You may have to pay Inheritance Tax if someone who died gave you a gift while they were alive.
- Trustees are responsible for paying Inheritance Tax on trusts.