This is a tax paid on the value of an estate owned (the total value of assets less liabilities) by a person when they die. Tax is payable at a rate of 40%, however most estates don’t have to pay Inheritance Tax because they’re valued at less than the nil rate band threshold (£325,000 in 2012-13). The nil rate band is the amount of assets you can leave to people free of inheritance tax.
When calculating the total value of the estate in order to review whether it is below the threshold, it is sometimes appropriate to include trusts or gifts made during someone’s lifetime, particularly in the seven years prior to death.
Increased threshold for married couples and civil partners
Since October 2007, married couples and registered civil partners can effectively increase the threshold on their estate when the second partner dies – to as much as £650,000 (in 2012-13). Their executors or personal representatives must transfer the first spouse or civil partner’s unused inheritance tax threshold or ‘nil rate band’ to the second spouse or civil partner when they die.
Many people will want to pass on their wealth and assets to their children or grandchildren to give them a helping hand as they look to make their way in life. Obviously, inheritance tax can serve to reduce the amount of money left, so it is important you seek the right advice and planning to make sure the amount of tax you pay is kept to a minimum.
The team at McHale & Co has the experience to advise you successfully on the right course of action to take with regards to inheritance tax planning and advice. We are approachable and friendly – the perfect combination to help set you on the right path.
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If you would like to know more about how our tailored services can best suit your needs, do not hesitate to get in touch. Although based in Greater Manchester, we can provide high-quality legal assistance to those who need it around the UK. Call us today on 0161 928 3848, or fill in the online contact form.