Inheritance Tax: The 10 Numbers you need to know
We are often asked about Inheritance Tax, with many of our clients wanting to make sure that as much of their hard earned savings are passed onto their loved ones as possible.
To help, we have picked the 10 key numbers that everyone needs to be aware of regarding Inheritance Tax:
£325,000
Everybody is entitled to pass on up to £325,000 of their estate (property, money and possessions) tax free. This is known as the ‘Nil Rate Band’.
40%
If your estate is worth over £325,000, then anything over that amount will be subject to an Inheritance Tax rate of 40%.
£650,000
Married couples, and registered civil partnerships have the allowance doubled, so the Nil Rate Band will be £650,000.
7
Any gifts up to £325,000 will reduce your Nil Rate Band by the amount of the gift if you die within 7 years. However gifts of more than the Nil Rate Band will be subject to taper relief; a gradual reduction in the amount of Inheritance Tax due on gifts made within 7 years of death.
£3,000
There is an Annual Exemption of £3,000, which means that the estate does not pay Inheritance Tax on any gifts up to £3,000 given away by the deceased in each tax year. If no money or assets are gifted in one tax year then it can be carried into the next tax year, however the maximum exemption is £6,000.
£5,000
You are able to gift your children or their new spouse a lump sum up to the value of £5,000 when they get married and this gift will be completely free of Inheritance Tax.
£2,500
If a grandchild gets married you can gift them or their new spouse a lump sum up to the value of £2,500, which will be completely free of Inheritance Tax.
£250
Inheritance Tax is not applicable on individual gifts worth up to £250. However if you give an individual more than £250 the whole amount counts, not just the money after the first £250.
10%
If 10% or more of the net value of an estate is left to charity then Inheritance Tax can be paid at a reduced rate of 36%.
0%
Inheritance Tax is not applied to any money or assets donated to charities, museums, universities or community amateur sports clubs.
If you have any questions or would like more information on Inheritance Tax planning, please get in touch:
T: 01727 85 22 99
E: enquiries@kdw.co.uk