Inheritance tax on property is to be paid if the taxable value of the estate (with any gifts made by the deceased added on if they were made in the seven years prior to their death) exceeds the nil rate band. The rate of inheritance tax on property is currently 40%.
Inheritance tax is paid on money, property and assets (known as the “estate”) that is left by an individual when they die. It may also have to be paid on gifts that are made during that person’s lifetime. You do not usually have to pay tax on other chattels you may receive from a deceased person’s estate.
Inheritance tax planning is changing, thanks to the chancellors Summer Budget 2015. In the budget, he announced that inheritance tax (IHT) was to be scrapped on homes worth up to £1million.
The new IHT proposals certainly look like good news for some people who will inherit their parent’s or grandparent’s home after April 2017, but those hoping for a nice tax-free windfall from an aged aunt, uncle or sibling will not be so lucky. This is because the property will only be able to pass to lineal descendants for it to be exempt when the additional rate is used.