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Inheritance Tax (IHT)

Helping you with your Inheritance Tax to reduce the burden of loosing someone

Inheritance Tax (IHT) is levied on a person’s estate when they die and on certain gifts made during an individual’s lifetime.

Losing a family member is never easy, and the last thing you will want to think about is whether or not you are liable for paying inheritance tax. However, it is essential that you check so that you are aware of your rights and can prepare your family for the future ahead.

Inheritance Tax is paid if the estate is worth more than the threshold which currently stands at £325,000. Above the threshold, there is a 40% tax liability from the estate, which may be reduced to as little as zero if the reliefs are claimed. If you are the executor or administrator of the estate you will need an accountant to advise you on any Inheritance Tax and other taxes you are eligible to pay.

We can help you to alleviate the stress of worrying about the future, and provide you with the tax advice you need. Whether you are worried about inheritance tax costs or calculating your annual income tax, we have the expertise to answer all your questions and give you the best plan for the future.

Most estates don’t have to pay inheritance tax, as they fall within the “nil rate band”. As long as your estate’s worth is not above £325,000 (gifts and trusts included) then you won’t have to pay 40% inheritance tax on any sums exceeding this threshold.

However, if you think your estate may be liable to inheritance tax on your death it is important to plan in advance so your tax liability will not be greater than it should be. There are many opportunities for tax-efficient planning if you put them in place in good time.

What other taxes do my heirs have to pay on their inheritance?

Your estate is only distributed after debts (if any) and Inheritance Tax (IHT) are paid. Depending on what they inherit, your heirs might also incur:

Income Tax – if what they inherit produces a regular income (e.g. share dividends or rent from a property)
Capital Gains Tax – if they sell their inheritance (e.g. property) for more money than what it was worth when you died.

How can I reduce the amount of tax paid?

Trying to reduce how much IHT is due on an estate is complicated. But, in short, you can reduce how much tax is paid by:

Leaving a legacy to charity
Putting your assets into a trust for your heirs
Leaving your estate to your spouse or civil partner
Paying into a pension instead of a savings account
Regularly giving away up to £3,000 a year in gifts

When do you have to pay Inheritance Tax?

Inheritance Tax (IHT) must be paid by the end of the sixth month after the person’s death. If the tax is not paid within this timeframe, HMRC will start charging interest.

Who pays Inheritance Tax?

If there is a will, it’s usually the executor of the will who arranges to pay the Inheritance Tax (IHT). If there isn’t a will, it’s the administrator of the estate who does this.

IHT can be paid from funds within the estate, or from money raised from the sale of the assets.

How much is Inheritance Tax?

Normally, there is no tax to be paid if:

The value of your estate is below the Nill Rate Band (NRB) of £325,000, or
You leave everything above the threshold to your spouse or civil partner, or
You leave everything above the threshold to an exempt beneficiary such as a charity

If the value of your estate is above the NRB, then the part of your estate above the threshold might be liable for tax at the rate of 40%.

What is Inheritance Tax?

Inheritance Tax (IHT) is a tax on the estate of someone who has died, including all property, possessions and money.

Experts Accountants for Small & Medium Businesses in Whitechapel, Brick Lane London.

Muhit & Co Certified chartered accountants is a widely-established firm which has a network that spreads across London with an office located at Whitechapel in Central London . The firm has been established since 2004 with a team of qualified accountants and tax specialists who have various industrial experience. We work with a large number of local businesses, sole traders and Individuals helping them achieve their goals through our pro-active and informative service.

Inheritance Tax (IHT)

Helping you with your Inheritance Tax to reduce the burden of loosing someone

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