Do you want to know how much of your estate you can pass on to your loved ones when you die? If so, you will need to know about inheritance tax. Prestige Tax and Trust Services asks; when do you have to pay inheritance tax?
What is inheritance tax?
At Prestige Tax and Trust Services we believe in forward planning. You need to ensure that your loved ones inherit your estate when you pass away. However in order to do so you need to know about inheritance tax and whether your estate will need to pay it.
In the UK, inheritance tax is a fee that must be paid to the government on a person’s estate (money, property, assets) once they pass away. However, the tax is only applicable if the financial sum of the estate eclipses a defined amount.
The inheritance tax threshold
The current inheritance tax threshold is £325,000. If your estate falls below the inheritance tax threshold, you don’t need to worry about it.
However if your estate is worth more than £325,000, you will have to pay inheritance tax. How much do you need to pay? Inheritance tax is calculated at a rate of 40%. Your estate will need to pay 40% of its value above the £325,000 mark to the government.
Say for example, your estate was worth £400,000. It would need to pay a 40% tax on £75,000. This would be £30,000. However inheritance tax isn’t always charged at 40%. It may be reduced to 36% if you leave 10% or more of your estate to charity.
Prestige Tax and Trust Services
Therefore if your estate is worth more than £325,000, you’ll have to pay inheritance tax. However you won’t be the one who pays it. The executor of your will or the administrator of your estate is legally responsible for working out inheritance tax and trustees are responsible for paying it.
This is why you need to learn how to write a will. This will ensure that you can appoint people you trust to ensure inheritance tax is paid on your estate when you die. If you want to make sure you write a legally sound will, let Prestige Tax and Trust Services help. We have an expert team who have the legal knowledge you need to ensure that inheritance tax will be paid on your estate when you pass away.