INHERITANCE TAX

There is today still a vast ignorance of extent of inheritance tax that is payable on death. The current nil rate band allows £255,000 to pass free tax. Inheritance tax at the rate of 40% is payable on the value of assets over and above this amount (subject to reliefs and exemptions) that pass on to children. Spouses are exempt from paying tax however this is in effect merely deferred until the death of the second spouse when the first spouse's estate is treated as belonging to the second spouses for tax purposes. Due to increase in house prices more and more estates now exceed the nil rate band which the government has not increased sufficiently.

Inheritance tax planning has therefore become more relevant. The tax burden can be reduced or avoided by simple planning and properly drawn up will. See Inheritance Tax Planning.