Inheritance Tax (IHT) does not just apply to those that are extremely wealthy, it is a tax that is charged on the value of property (not just a house, but all of a deceased’s property or assets) arising when someone dies. It also applies to certain lifetime gifts subject to certain exemptions and reliefs. For example, a 40% tax will apply if the value of your Estate (including your home and any gifts made in the seven years preceding your death) exceeds the current threshold (£325,000 in the 2011- 2012 tax year).
It should be noted that Inheritance Tax can be reduced or even eliminated with proper planning and we can advise on this.
To establish whether Inheritance Tax is due on an Estate it is necessary to value the Estate by adding up all assets such as property, possessions, money and investments and then deducting the deceased’s debts (including household bills and funeral expenses). It should be noted that jointly owned assets and assets that are held in trust also make up part of the deceased’s Estate.
In most cases Inheritance Tax is due within six months of the deceased’s death, after which time interest is added by HM Revenue and Customs (HMRC).
Please visit our glossary of probate terms by clicking here
