What is Inheritance Tax and Who Pays it?

What is inheritance tax and who pays it? This question is often asked when dealing with a deceased loved one's estate. Essentially it is a tax on the value of an estate when the value exceeds £325,000.

It is currently a topic of conversation in the national media as the government debates the possibility of cutting the amount it would tax a property that surpasses the threshold amount

Finding out in advance if it may play a role in your future planning is an important step for anyone seeking to lay solid foundations for loved ones after they’ve died.

What is Inheritance Tax and who pays it?

If your estate is inherited by your spouse or civil partner, then the whole estate is exempt from inheritance tax. However, if your estate is inherited by anyone else, inheritance tax could be payable.

There are certain additional exemptions and reliefs available and it is well worth your time discussing your options with a legal professional.

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If it applies to your estate, the person responsible for ensuring payment is the Executor, who you will have chosen when creating your Will. If there’s no valid Will in place then it will fall to the person dictated by law as being in charge of distributing the estate.

Tips on Inheritance Tax and your estate

When planning for the future, it’s essential to consider the range of possibilities and different scenarios that may apply to your estate. When considering the impact of inheritance tax:

• Instruct a Solicitor to prepare a Will for you. They will discuss your assets and provide you with advice on whether Inheritance Tax is a concern or not. They may also be able to draft a more tax-efficient Will than if you wrote one yourself.
• If you believe your estate would be liable to pay inheritance due to the value, then it may be worth discussing this with a tax advisor as they may be able to review your assets so that less tax is payable on your death.
• If inheritance tax will be payable, you may wish to consider leaving a gift in your Will to charity as these gifts are exempt from inheritance tax.

Essentially, lifetime planning is better than post-death planning! There is not an awful lot you can do to mitigate tax after you have died.

Considering your estate?

Get in touch with our team today for a no-obligation chat about your circumstances. Our expert advisors can help you better understand your options and support you through the process of providing a secure future for those you wish.

For more information on What is Inheritance Tax and who pays it? and other questions, click on the link to be taken to our FAQ page.

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