When planning out their estates, many people forget about inheritance tax. They bequeath their belongings to their loved ones, and they don’t think about their heirs having to pay that inheritance tax on both property and money that is inherited. Even less people think about it these days because it’s not been in the headlines recently.
It is important to understand that just because the UK has this inheritance tax doesn’t mean that certain groups of people aren’t exempt. That is why it’s important to know the specific laws that surround this type of tax. Currently the inheritance tax threshold is £325,000 per person or £650,000 for a married couple. This is only valid if the first person to die leaves their entire estate to their partner. Everything over this is subject to a 40% levy.
Inheritance tax needs to paid within 6 months of the person dying otherwise there will be interest to pay on the estate. Most people don’t realise that you can pay inheritance tax over 10 years on things that are difficult to sell such as houses and certain types of shares.
If you aren’t sure if the inheritance tax applies to you or your beneficiaries, then it’s time to find out. For starters, there are things that people can do to keep those inheritance taxes out of play. Yes, that’s right, you can take care of it all beforehand so that heirs aren’t having to pay extra taxes.