Currently, HMRC taxes any assets or estates passed on through inheritance at 40 per cent once they reach the inheritance tax threshold of \u00a3325,000. It is planned that this threshold will remain in place until 2014\/15.<\/p>\n
However, there are various ways to make sure you make the most tax reliefs and exemptions when planning how your estate can be passed on.<\/p>\n
Since 6 April this year, HMRC has introduced a new way of reducing your inheritance tax bill; by donating to a qualifying charity. Any estate over \u00a3325,000 leaving 10 per cent of the net value of the estate to charity may pay a reduced inheritance tax rate of 36 per cent.<\/p>\n
The net value of an estate is the sum of all assets after any debts, liabilities, reliefs, exceptions, and the nil rate band have been deducted. It also states that the chosen charity must be registered with HMRC.<\/p>\n
The way an estate’s value is calculated may also be complex, as HMRC view estates as comprising of different components, each of which may be liable for different rates and allowances. For instance, assets that are owned jointly through ‘survivorship’, assets in trust, and those which are owned outright, may all be treated differently. Furthermore, you may be able to merge these components in order to gain the maximum benefit.<\/p>\n