Inheritance & Trust Tax

Capital Gains Tax

Inheritance tax: what is it?

An inheritance tax is a tax levied on the assets (the property, money, and possessions) of someone who has died (after inheritance tax allowances have been deducted). The standard rate of inheritance tax is 40. A lifetime IHT is also payable in certain instances if there is a chargeable transfer (e.g. transfers to almost all trusts) that exceeds the lifetime allowance.

With careful planning, however, you can reduce your IHT liability to zero.

Who has to pay?

The death of a loved one is a traumatic experience – and having to deal with tricky legislation governing what happens to that person’s assets does not make the process easier. Fortunately, an experienced tax accountant or chartered tax adviser will be able to relieve some of that burden; and, on this page, we will talk through some of the key facts surrounding inheritance tax planning.

In line with the Inheritance Act 1984, there is a chance that, should someone die in England and Wales, part of their estate will be taxable. However, there is a threshold – known as the ‘nil rate band’ – before which no estate tax is payable. This has been fixed at £325,000 since 6th April 2009.

The existence of the ‘nil rate band’ means that if the gross value of the deceased’s assets (including any gifts made within the preceding seven years) is less than £325,000, inheritance tax will not be due. The enhanced residence nil rate band is an additional benefit: this extra allowance becomes available if you leave your main residence to your lineal descendants (including children and grandchildren).