What is Inheritance Tax (IHT) ?
Often called IHT, is paid on your estate after you die. But it is not universal, and most families will never need to pay it on behalf of their deceased loved one.
So far your IHT liability at 40% is
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Frequently Asked Questions
The standard Inheritance Tax rate is 40%. It’s only charged on the part of your estate that’s above the threshold.
The main residence allowance will be introduced gradually starting at £100,000 this tax year and rising to £175,000 in April 2020. So, from 2020 a married couple with children will be able to pass on £1m in total – two lots of £325,000 (£650,000) and two lots of £175,000 (£350,000).
UK inheritance tax is currently 40%, but there are exceptions to this rule. For example, a spouse inherits the estate tax-free. All other heirs will have to pay the inheritance tax on their share of the estate before its distribution. However, good news is, first £325,000 of the assets is an untaxed allowance
There is normally no IHT to pay if you pass on a home and move out and live in another for seven years. You need to pay the market rent and your share of the bills if you want to carry on living in it otherwise you will be treated as the beneficial owner and it will remain as part of your estate.
Some gifts you give while you’re alive may be taxed after your death. Depending on when you give gifts, ‘taper relief’ might mean the Inheritance Tax charged on the gift is less than 40%.
Other reliefs, such as Business relief, allow some assets to be passed on free of Inheritance Tax or with a reduced bill.