It can be complicated to understand inheritance tax. This will help you to make sure you get everything you are entitled to. Although the amount due can vary depending on who you are, effective planning will ensure that it is minimal.
What is Inheritance tax?
IHT is a tax that you pay on all your valuables when you die. You can have any property or possession with value, such as jewelry, artwork, and cars. There is an inheritance tax threshold. It currently says that the estate of a person must exceed 325,000 to be subject to inheritance tax computation in UK.
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Who is liable to pay IHT?
Usually, the legal representative of the deceased will be required to pay the liability. They usually have six months to pay the liability. Trustees and anyone responsible for trusts will be held liable for trust assets (including money, land, or investments).
Exemption from IHT
Sometimes your property may be greater than the threshold, but you can still be exempt. These are the circumstances:
Donated to Partner – No liability if your spouse or partner is permanently living in the UK.
Charities – Any gifts to charities, universities or clubs, museums, and the national trust are exempt.
Annual Exemption – You can usually give away as much as 3,000 annually in inheritance tax-free. This is called the annual exemption.
You can give small gifts to as many people as you like, up to 250. However, you should not share the same gift with the person who has the 3000 annual exemption.