Inheritance Tax is a tax that is levied by the government when wealth is gifted either during your lifetime or on your death.
The current Inheritance Tax limit for the 2012/2013 tax year is £325,000 and this allowance is known as the Nil Rate Band. If the total value of your financial assets is more than the Nil Rate Band, it is possible that Inheritance Tax may be payable on the value of your assets over this amount. The rate of Inheritance Tax upon death is currently 40%.
Inheritance Tax payable on death is based on the value of your estate when you die. This will include:
People who are UK domiciled (i.e. were born here or have moved here and severed ties with their country of birth or have lived permanently in the UK for 17 of the last 20 years) are liable to Inheritance Tax on their UK and worldwide assets. People who are not UK domiciled are liable to Inheritance Tax on the value of their UK assets only.
Charities and a spouse are exempt from paying Inheritance Tax - (although you should bear in mind that anything you leave to your spouse will increase the value of their estate and may result in a tax liability on their death depending on the value of the estate). Some assets also attract relief from Inheritance Tax e.g. agricultural and business assets.
For a consultation with a specialist Wills, Probate, Tax or Trusts Lawyer please call Holdens Solicitors on 01524 32484 or contact us online.