UK Inheritance Tax
What is Inheritance Tax?
Inheritance Tax is paid on an estate when somebody dies leaving an estate of over the threshold. In some circumstances it can be payable on gifts or trusts made during someone's lifetime. Many estates will not have to pay Inheritance Tax because they are valued at less than the threshold (which is set at £325,000 in 2009-10). However many estates are subject to inheritance tax, especially homeowners in South East England, where house prices push many estates over the threshold.
Inheritance Tax Exempt Gifts
Some people and organisations can receive gifts from your estate without having to pay any Inheritance Tax. Whether you make them during your lifetime or as part of your will, these gifts will be exempt from inheritance tax.
You can make exempt gifts to:
- UK charities
- a number of national institutions including as museums, universities and the National Trust
- your wife, husband or civil partner, on the condition that they have a permanent home in the UK
- any UK political party with at least two members elected to the House of Commons or one elected member and over 150,000 votes
Any gifts given to an unmarried partner, or a partner that you're not in a registered civil partnership with, will not be exempt from inheritance tax.
Assets that typically make up an estate
Assets are anything that has a value, such as:
- houses and land, including farmland
- money in bank, building society or savings accounts
- businesses, or business assets
- stocks and shares (and other simlilar investment products)
- personal belongings such as antiques, jewellery and other collectibles
- furniture, fixtures and fittings in a house
- motor vehicles
- pensions that include a lump sum payment on death
- assets in a trust from which the deceased benefited
- payouts from life insurance policies
- foreign assets held abroad including foreign bank accounts, property or shares