Inheritance Tax Planning

Inheritance Tax (IHT), sometimes referred to as ‘Death Duty’, is a tax on the estate left behind by someone who has died. The estate includes items like property, possessions, shares, and money sitting in bank and savings accounts.

The headline figure for inheritance tax is 40%, payable on everything in the estate over the value of a Nil Rate Band (NRB). In 2021, the NRB is £325,000 for a single person. This means that if the total value of a person’s estate, including property, possessions and money, came to £400,000, inheritance tax of 40% could be payable on £75,000.

However, there are some exemptions and transferable allowances that can help reduce this.

Inheritance Tax is due by the end of the sixth month, following the person’s death. Any delay will incur additional interest payments from HMRC. Where there is a valid Will in place, it is the executor who will arrange the calculation and payment of Inheritance Tax. If there is no valid Will, the administrator of the estate will do this.

We can advise on a variety of taxation issues revolving around Estate Planning, in particular what the tax implications are of various future life planning strategies, such as creating a trust fund for your loved ones, or being a beneficiary of a trust already.

You may also be considering making some gifts during your lifetime and want to know what the allowances are available to you and what the implications are of making such a gift.