30 Mar 2016

Our 60-second guide to Inheritance Tax

Our 60-second guide to Inheritance Tax

 

Inheritance tax is a tax on money or possessions you leave behind when you die, and on some gifts you make during your lifetime.

Here's a quick guide explaining the key things you need to know.

What is Inheritance Tax?

Inheritance Tax is paid if a person’s estate (their property, money and possessions) is worth more than £325,000 when they die. This is called the ‘Inheritance Tax threshold’.

There are different thresholds for previous years (click here to see them).

What are the Inheritance Tax rates?

The rate of Inheritance Tax is 40% on anything above the threshold. The rate may be reduced to 36% if 10% or more of the estate is left to charity.

Who pays Inheritance Tax?

Usually the ‘executor’ of the will or the ‘administrator’ of the estate pays Inheritance Tax using funds from the estate.

An executor is a person named in the Will to deal with the estate - there can be more than one. An administrator is the person who deals with the estate if there’s no Will.

Trustees are responsible for paying Inheritance Tax on trusts.

If you’ve received an inheritance, you usually don’t pay Inheritance Tax. There are some exceptions. You may still have to pay other taxesYou may have to pay Inheritance Tax if someone who died gave you a gift while they were alive.

What is the deadline for paying Inheritance Tax?

The executor of a will or administrator of an estate usually has to pay Inheritance Tax by the end of the sixth month after the person died. After this, the estate has to pay interest.

You can pay Inheritance Tax in instalments over 10 years on things that may take time to sell - for example, property and some types of shares.

Expert legal support

Aberdein Considine have a team Independent Financial Advisers and lawyers across Scotland who can assist you with IHT planning. To book an appointment, call 0333 0066 333 or click here


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