Inheritance Tax

Inheritance Tax

Inheritance Tax

In UK, Inheritance Tax was introduced as a tax on estates from 1796, and then later called legacy, succession and estate duties. Estate duties came as Capital Transfer Tax with a wide scope and changed value and now these days it is named as Inheritance Tax.

This tax is also known as "Death Duties" Inheritance tax paid if the value of the estate adds up to more than 325,000. Inheritance tax paid on an estate, adds value of all the assets such as a house, possession, money and investments - and deducting any debts the deceased may have owed, including household bills and funeral expenses.

Who is responsible for paying Inheritance Tax?

Inheritance Tax is payable by the executor or personal representative, who uses funds from the deceased's estate that are not held in trust. The inheritance tax rate depends on the relationship of the heir to the deceased, if the heir is a distant relative or a friend the inheritance tax rate will be much higher than if the heir is a spouse or child of the decedent. When assets or amount transferred into a trust then the trustee is responsible for paying Inheritance Tax.

Inheritance Tax exemptions and reliefs-

You get the exemptions from Inheritance Tax, even if your estate is over the threshold in the following situation-

- When deceased leave assets to a spouse or civil partner who has their permanent home in the UK.

- Any gifts you make to a 'qualifying' charity - during your lifetime or in your will - will be exempt from Inheritance Tax.

- If you survive for seven years after making a gift to someone, the gift is generally exempt from Inheritance Tax.

- You can give up to 3,000 away each year, either as a single gift or as several gifts adding up to that amount - you can also use your unused allowance from the previous year but you use the current year's allowance first.

- Small gifts of up to 250 are tax-free.

- Wedding and civil partnership gifts

- Gifts to someone getting married or registering a civil partnership are exempt up to a certain amount.

- If the deceased owned a business, farm, woodland or National Heritage property, some relief from Inheritance Tax is available.

An effective inheritance tax planning and proper guidance can reduce or avoid unnecessary tax. Apex Associates can help to save you and your beneficiaries many thousands of pounds in tax by careful inheritance tax advice and planning.

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