Do you know how much inheritance tax will need to be paid after you die?
When you die there could be inheritance tax to pay, which would reduce the amount of inheritance you leave for your loved ones. Would you know how to calculate the amount of inheritance tax you’re liable for? Co-op Legal Services has created a digital inheritance tax calculator to help couples who are married or in a registered civil partner do just that.
With the right planning, you can have some control over the amount of inheritance tax that will need to be paid after you die. Whether inheritance tax is payable depends on a few factors, including what you own, how you own it, how much it’s worth and who it’s being left to. It will also depend on whether you’re married or in a civil partnership with someone, and whether they are still alive when you die.
If you are liable for inheritance tax, there are certain plans you can put in place now to limit the amount of inheritance tax that needs to be paid after you die. This means more of what you own can be passed on to your loved ones.
How does inheritance tax work?
Everyone can pass on a certain amount of inheritance without there being any inheritance tax to pay. This tax-free allowance is called the nil rate band, and currently this is £325,000 per person. This allowance can be transferred between spouses or registered civil partners, meaning the allowance could increase to £650,000 when the surviving partner dies. There’s also an additional allowance if your home is being left to certain people, including your children or grandchildren.
Even if you’re passing on more than the nil rate band allows, if it’s going to your spouse or a charity then, generally speaking, no inheritance tax will be payable because there’s an exemption for these beneficiaries. These are just a few of the exemptions and allowances that can be applied.
If any part of your estate is liable for inheritance tax, this will be charged at 40%.
After you die, HM Revenue & Customs will need to know whether any inheritance tax is payable and if so, how much. Whoever is dealing with your property and assets will be responsible for calculating the tax, providing this information to HMRC and paying any tax that’s due.
To help you understand where you stand on inheritance tax, Co-op Legal Services has created a digital inheritance tax calculator. This interactive calculator asks a series of questions and will then tell you how much inheritance tax is likely to be due after you die. This can help you to plan ahead and make informed decisions on how to manage your inheritance tax liability.
With the right advice, Wills and trusts can be an effective solution. As a Silversurfers member, you can benefit from a £25 discount on Will writing and estate planning services with Co-op Legal Services. Find out more.
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