Inheritance tax (IHT) is the tax on the estate of someone who has died. The estate will include the value of all the property, personal possessions and money. There are strict rules on valuations and GA Solicitors can advise you at every step.
There is normally no tax to be paid if:
- The value of the estate is below the IHT threshold of £325,000
- Everything is left to a spouse or civil partner
- Everything is left to an exempt beneficiary, such as a charity
It is really important to check if assets have been given away in the seven years before death as this must also be included.
If the value of the estate is above the nil rate band (NRB) of £325,000; then the excess above this threshold will be taxed at 40%.
So for an estate worth £425,000; the IHT threshold is £325,000, the tax charged will be on £100,000 (£425,000 – £325,000). The tax would, therefore, be £40,000 (40% of £100,000).
The NRB is fixed at £325,000 until 2021.
The Residence Nil Rate Band (RNRB) has been introduced recently.
This allowance is on top of the NRB and relates only to your home. To be eligible you must gift your home in your will to your descendants.
Provided certain conditions are met, the RNRB gives an additional allowance to be used to reduce the IHT against a home. We can advise you on this.
The RNRB is currently £100,000, but it will rise over time to reach £175,000 in 2020/21.
The rules in relation to this are complex and GA Solicitors’ specialists can advise you as to how this allowance might be claimed. Read our blog post about inheritance tax to find out more.
If you have downsized or even sold your home, GA can help you and advise on how this allowance can still be claimed.