- IHT is a tax charge based on the value of someone’s estate when they die, though currently any transfer to a surviving spouse or civil partner is exempt
- An estate includes property, savings, investments, personal possessions and other assets held in the deceased’s name
- Currently, estates worth more than £325,000 may be taxed on the amount above this level
- The standard IHT rate is 40%, although this can reduce to 36% if at least 10% of the estate is left to charity
- There is an extra allowance (£175,000) when leaving a main residence to direct descendants (children, stepchildren or grandchildren), which can increase the tax-free amount
- The tax is usually paid by the executor(s) of the estate before assets are distributed to beneficiaries
- Making lifetime gifts, within certain rules and allowances, can help reduce the value of an estate over time
- In some cases, placing assets into trusts may help with passing on wealth while keeping a level of control, but this can be complex
- Planning ahead may help reduce the amount of tax due, but the rules can be complicated
- Seeking professional advice can help ensure you understand your options and make informed decisions for yourself and your family.
