There are often stories in the tabloids about Inheritance Tax, which can confuse matters. To help you get to grips with the facts, here are our top five things to know about IHT.
- Inheritance tax is currently 40%. This is usually paid by the person dealing with the estate, who tends to be the executor of the will.
- Estates worth less than £325,000 don’t normally have to pay IHT.
- If a bequeathed estate is worth less than £325,000, the spouse or civil partner can have the remainder. For instance, if John doesn’t leave anything to his family, his wife Jane can technically pass on £650,000 tax-free.
- There are a number of exemptions to the seven-year rule when it comes to gifts. One of the main exemptions is you can give up to £3,000 away as gifts each year.
- There is 100% IHT relief on legacies left to charities and amateur sports clubs in wills. If you donate more than 10% of your estate to charity, you may qualify to pay Inheritance Tax at a reduced rate of 36%.
For independent financial advice and tax planning, get in touch with us today.
The value of tax relief depends on your individual circumstances. Tax laws can change.
This article originally appeared in the autumn 2016 edition of Telegraph magazine. Download the magazine now.