Broadly, Inheritance Tax (IHT) is a tax charged on transfers of capital by UK individuals on certain lifetime transfers and on wealth at death. There are a number of IHT reliefs and exemptions available, however, to reduce the IHT charge with perhaps the main one being the IHT "Nil-rate band", currently £325,000. The IHT rate is currently 40%.
Let us say Mr A dies in November 2010 with an estate of £600,000 and he leaves this to his children. He has not made any life time gifts and therefore on his death a charge to IHT of £110,000 would arise as follows:
Estate - £600,000
Less: NRB - £325,000
Subject to IHT - £275,000
IHT @ 40% - £110,000
IHT is an exceptionally complex area and it is essential that proper advice is sought. If you think you need our assistance, please get in touch and remember an initial consultation is FREE!
The above is for general guidance only. Buick & Co Chartered Tax Advisers take no responsibility for this blog and its reliability. If any tax planning is to be undertaken specific advice should be sought beforehand from a professional tax advisor.