Have a question on Inheritance Tax or about hiring an Inheritance Tax solicitor?
We have some answers for you. If you can't find your answer below, our estate planning solicitors can help with your Inheritance Tax questions. You can also learn more about our Inheritance Tax Services.
With many assets and factors to consider, Inheritance Tax (IHT) planning can be a tricky business. Your solicitor will help you plan your estate and ensure you make the most of all available tax relief schemes to reduce your bill and protect your inheritance for those you wish to leave it to.
Inheritance Tax is a tax that may have to be paid on your estate when you die.
It is charged on the value of your estate above the nil rate band, currently £325,000. Anything above this threshold is typically taxed at 40%.
Additional allowances, such as the residence nil rate band, may apply if you leave your home to direct descendants.
There are also exemptions, for example transfers between spouses or civil partners are usually tax free.
As the estate owner, you don’t pay Inheritance Tax. This tax is paid by your beneficiaries after you die.
Inheritance Tax is usually payable within six months of the date of death. After this date, HMRC can begin to charge interest on the amount due. Usually, you can pay a lump sum before the six-month period, even if you haven’t finished valuing the estate.
With high-net-worth individuals, it can take many months to get an accurate value for all assets, so a ‘payment on account’ is often used to prevent interest being charged. If this payment is more than the final IHT bill, HMRC will refund the amount.
If you are unsure when you need to pay Inheritance Tax in the UK, it is important to seek advice early to avoid delays or penalties.
Whether your children (or any other beneficiaries) have to pay IHT on your estate will depend on various factors, including the total value of your estate and who you bequeath your primary residence to.
The Inheritance Tax bill is drawn from the value of your estate. Whatever is left after IHT has been paid is then transferred to your beneficiaries, as per the instructions in your Will.
If your combined assets are worth less than the Nil Rate Band (currently £325,000), then there is no Inheritance Tax to be paid. This means your beneficiaries can usually inherit £325,000 of assets before they need to pay inheritance tax.
Contact Crombie Wilkinson Solicitors to discuss your options. We will help you plan your estate in a way that reduces your Inheritance Tax bill so your children or other beneficiaries can inherit the highest amount possible.
There are various tax relief systems in place that can reduce an Inheritance Tax bill and ensure your children/beneficiaries benefit entirely from your legacy. These can include gifts, trusts, business investments and charity donations.
The best way to reduce your IHT is to work with an expert solicitor who will be able to guide you on the steps you can take to ensure your beneficiaries receive the highest amount possible from your estate.
You can learn more about your options on our Inheritance & Estate Planning page.
Contact Crombie Wilkinson Solicitors to see how we can help you save on your inheritance tax bill.
If you’ve spent decades paying off a mortgage to create an inheritance for your children, the last thing you want to do is have to sell your property to pay the fees for residential care. Unfortunately, this is a very real possibility for many families in the UK.
You may think gifting the property to your children before your death is a good idea, but this could actually cause more issues down the line, both from a personal and an Inheritance Tax point of view.
Read our guides about this topic:
We can help you plan ahead and consider all your options when it comes to protecting your children’s inheritance. Contact us today to arrange an appointment.
Pensions are usually exempt from Inheritance Tax. Depending on factors like the type of pension and the age you die, you can bequeath your pension money relatively easily. However, please be aware that the Autumn Budget 2024 announced inherited pensions will be brought into Inheritance Tax from April 2027.
Distribution of your pension assets will not usually be covered by your Will. You will have to tell your pension provider ahead of time who you want to inherit any of your remaining pension funds when you die.
Get in touch with Crombie Wilkinson Solicitors if you have any questions regarding inheritance tax and pensions.
As long as you are the sole, living owner of your property, you can directly bequeath it to your children in your Will.
Your beneficiaries don't usually have to pay inheritance tax on a house if you gifted it to your family seven years before you die. However, if it was gifted within the seven-year threshold and you've gifted more than £325,000 of non-exempt gifts, then tax will be due.
If you’re a part-owner or a joint tenant, then there will be other elements to consider. You may also need to think about Inheritance Tax, and how your property fits into a wider estate planning strategy.
Our expert solicitors can offer advice on leaving your property to your children in your Will.
The 7-year rule applies to gifts made during your lifetime. If you give away assets and live for seven years after making the gift, it is usually exempt from Inheritance Tax.
If you die within seven years, the value of the gift may be included in your estate and could be subject to tax, depending on how long ago it was made.
If you want to protect the inheritance of your children from a previous relationship, you must create a Will specifically expressing how you want your estate to be disposed of.
When you get married again (whether it’s a second or seventh marriage), your existing Will becomes null and void unless it’s carefully worded. Inheritance law states that husbands, wives and civil partners automatically inherit, so if you haven’t planned your estate accordingly, you could find your children do not inherit anything.
The aim of Inheritance Tax is to prevent the build-up of property and wealth over generations without wider economic contribution. It aims to redistribute income, so some earned wealth goes back to the state.
For example, if a property becomes more valuable over a person’s lifetime due to the market, Inheritance Tax means the state would also benefit from that growth in value.
In the UK, in theory, you may be able to pass on up to £1m without Inheritance Tax, depending on your circumstances. This happens when the second person in a married couple passes, and both have used their full IHT allowance.
They both would have a £325,000 tax-free allowance, plus the £175,000 main residence allowance (£500,000) for both of them (£500,000 x 2 = £1m).
Get in touch with Crombie Wilkinson Solicitors to see how we can help you plan your estate, write your Will, and protect your children’s inheritance.
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