What is Inheritance Tax (IHT)?
Some people describe Inheritance Tax as a voluntary tax due mainly to the fact that there are many ways to mitigate it. However many people still do not make the efforts to do so which contributes to the £2 billion the Inland Revenue raise each year.
In summary, Inheritance Tax is potentially due on monies that are passed onto beneficiaries other than the spouse.
IHT is a tax on your estate when it is passed to your beneficiaries. IHT is taxed at a rate of 40% on any amount over £325,000. An example of this is as follows:
Total Value of Estate = £425,000
Based on a single allowance of £325,000 would attract IHT of £40,000
There are lots of ways to avoid Inheritance Tax using Trusts or setting up Life Assurance policies however such a technical area requires financial planning advice.
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