What Is Inheritance Tax?
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 Overview
Inheritance tax is paid directly out of the deceased’s estate by the executor of their will before the estate can be distributed amongst beneficiaries named in the deceased’s will, or, where no will was made, under the intestacy laws.
The executors or administer the estate, and they are responsible for working out the amount of inheritance tax that is due to be paid. They also have a responsibility to ensure that any inheritance tax due is paid out either from cash held by the estate or from the sale of assets.
Inheritance tax is due on the last day of the month that falls six months after the deceased’s death. Any unpaid amount will attract an interest charge, currently set by HMRC at 2.75%.
Inheritance Tax On Gifts
Gifts made by the deceased which are in excess of lawful exemptions in the seven years before their death are treated as being a part of the deceased’s estate for the purposes of inheritance tax. Any tax due is payable by the person who received the gift. Tax is only payable on the amount of the value of the gifts over the “nil rate” band.
If the gift was given more than three calendar years before the date of the person’s death, a “taper relief” will be due. The amount increases depending on the number of years between the date of the gift and the date of the person’s death.
Do you have more questions? Assured Wealth and Estate Planning Solutions can advise on a number of elements of tax savings. Talk to one of our Warrington Estate Planning, Liverpool Estate Planning, Altrincham Estate Planning, Wilmslow Estate Planning, Manchester Estate Planning or Knutsford Estate Planning specialist today.