Valuing an estate to see if Inheritance Tax is due

To find out if Inheritance Tax is due on an estate, you must first value the estate. This means adding up the value of all the assets in the estate - such as a house, possessions, money and investments - and deducting any debts the deceased may have owed, including household bills and funeral expenses.

An estate also includes the deceased's share of any jointly owned assets and the value of any assets held in trust.

You should also review any gifts that the deceased may have made in their lifetime to see if they are exempt, and if they aren't exempt, include them in the overall value of the estate (see more below).

Inheritance Tax exemptions and reliefs

Sometimes, even if your estate is over the threshold, you can pass on assets without having to pay Inheritance Tax.

Spouse or civil partner exemption

Your estate usually doesn't owe Inheritance Tax on anything you leave to a spouse or civil partner who has their permanent home in the UK - nor on gifts you make to them in your lifetime - even if the amount is over the threshold.

Charity exemption

Any gifts you make to a 'qualifying' charity - during your lifetime or in your will - will be exempt from Inheritance Tax (see more in the link below).

Potentially exempt transfers

If you survive for seven years after making a gift to someone, the gift is generally exempt from Inheritance Tax, no matter what the value.

Annual exemption

You can give up to £3,000 away each year, either as a single gift or as several gifts adding up to that amount - you can also use your unused allowance from the previous year but you use the current year’s allowance first.

Small gift exemption

You can make small gifts of up to £250 to as many individuals as you like tax-free.

Date: 2015-01-29; view: 794