The present Government has recently announced that the current rate of Inheritance Tax (£325,000) is to be frozen at £325,000 for individuals and £650,000 for couples for three years from 2015. But how much is inheritance tax ? when does it have to be paid and when ?
The key facts you need to know :-
1. The current rate of inheritance tax in the UK is 40% on estates above £325,000. However there are a number of important reliefs and exemptions
2. No inheritance tax is payable for assets left between spouses or civil partners.
3. Since 2007, the rules allow the unused nil rate band ( this is the IHT tax threshold existing at the date of death ) to be transferred and used following the death of the Second spouse or civil partner.
4. Approximately 4% of the UK pay inheritance tax.
5. It is compulsory for an inheritance tax return to completed in every application for probate – the two main forms are the IHT 205 and IHT 400
6. Inheritance tax must be paid in full on cash assets while instalments can be arranged with the Inland Revenue regarding tax due on any property.
7. There are various exemptions and reliefs that can be claimed the most common ones are :-
- Spouse exemption
- Charity exemption. Gifts to charities are exempt
- Potentially exempt transfers ( PETS’s). If you survive for 7 years after making a gift to someone, this can be free from inheritance tax
- Annual exemption. You can give up to £3,000 away each year, either as a single gift or as several gifts adding up to that amount
- Small gift exemption. You can make small gifts of up to £250 to as many individuals as you like tax-free.
- Wedding and civil partnership gifts. Gifts to someone getting married or registering a civil partnership are exempt up to a certain amount.
8. You must pay Inheritance tax on time otherwise fines are levied by the Inland Revenue.
If you need help with probate or inheritance tax – call Tim Murden on o1482 429985 or e-mail at firstname.lastname@example.org. TM Solicitors specialises in probate and assists clients both in the UK and abroad on all probate cases.