Inheritance Tax Explained

Inheritance Tax Explained

Inheritance Tax is the tax paid by heirs of an estate they inherited from someone who’s passed away. The estate can include property, any finances and assets – basically, anything of significant value – which combined are valued at £325K and over. There’s no inheritance tax on an estate worth less than £325K. Also, there’s no inheritance tax if the heir is a spouse, a civil partner or a charity. But even if there’s no tax to pay, the value of the estate must be reported to HMRC.

To Do List

When you have become the heir of an estate, you need to start your ‘to do’ list with 4 main bullet points:

  • Contact the deceased person’s banks – funds available
  • Contact any service providers – take note of bills and debts
  • Get an estimate of the gross value of the estate
  • Report value of estate to HMRC

Deadlines

You need to understand that whilst it takes considerable time to value the estate, there are deadlines to be met. These deadlines are in relation to reporting the estate to HMRC and paying for any tax due. Inheritance tax forms should be submitted to HMRC within a year and any tax is due within 6 months from the obit date. You don’t need to pay the full bill within 6 months, but you need to start paying the minimum due.

Professionals To Help You

You will need some professional help for some areas in your ‘to do’ list – a professional valuer and a solicitor. A valuer will give you an accurate figure that can then be submitted to HMRC. The figure will include any assets worth more than £1500. A solicitor will help you understand the complexities of inheritance tax and how to manage all aspects of estate inheritance. A solicitor can help you understant and get tax relief and exemptions. You could get business relief on some of the assets, which could mean no tax at all or reduced tax payment. SG

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