There are a range of taxes paid by those in the UK with these covering everything from income to products bought and sold. Inheritance tax is probably one of the most well-known of these but many may be unfamiliar with the details of it. If you're interested in learning more about inheritance tax, here is everything you need to know.
What is an inheritance tax? Everything you need to know According to the UK Government website , inheritance tax is a tax paid on the estate (property, money and possessions) of someone who has passed away. However, most people do not pay this tax. Only those with estates valued at £325,000 and over will have to contribute.
This tax also applies to those who leave everything above the £325,000 threshold to their spouse, civil partner, a charity or a community amateur sports club. If you're giving your home to your child, (including adopted, foster and/or stepchildren) or grandchildren, your threshold can increase to £500,000. What are the rates for inheritance tax in the UK? The standard inheritance tax rate is 40% with this only being charged on the part of the estate above the aforementioned threshold.
According to the government, the estate can pay inheritance tax at a "reduced rate of 36% on some assets" if the relevant party leaves 10% or more of the ‘net value’ to charity in their will (the net value is the estate’s total value minus any debts.) Recommended Reading: What months do you not pay council tax in England, Scotland and Wa.