How much Inheritance Tax will I pay?

Inheritance tax is a tax on the estate (the property, money and possessions) of someone who has passed away.

A person’s ‘estate’ is made up of everything they owned at the time of death, this includes:

• Money, both cash and money in bank or building society accounts.
• Property, for example, their home.
• Shares in businesses.
• Investments.
• Personal possessions, for example, their car or jewellery.

If someone owns assets jointly, their share of the asset’s value is included in the estate.

Every individual has a tax-free allowance to give away after they die, this is known as your “nil rate band” allowance.

For an individual, the nil rate band is currently £325,000.

If an individual owns a property and is passing this to their children or their issue (grandchildren, great grandchildren etc) then they get a maximum additional amount of £175,000 (limited by the value of the property)

Therefore, the maximum nil rate band for an individual is £500,000.

Spouse Exemption

There is no Inheritance Tax to pay when a person inherits from their husband or wife whatever the value due to spouse exemption.

The position here is that any allowances that are not used up on the first death may be transferred to be used on the death of the surviving spouse.

Therefore, a couple’s maximum nil rate band is £1,000,000.

How much will I pay?

In order to estimate how much inheritance tax you will owe in the future, you must first calculate what your nil rate band would be with the current rates.

Anything above the threshold is charged using the standard Inheritance Tax rate which is currently 40%.

There are some exemptions to the above, and ways of reducing the Inheritance Tax rate.

Contact us

If you would like to discuss your IHT position, including a review of your Will(s) to ensure that you leave your assets in the most tax efficient way please contact the Private Client team at George Green LLP on 01384 410410 or complete our online enquiry form.