What else do I need to know?
Executors make the necessary decisions
Where your estate is left to someone other than a spouse or registered civil partner (for example, to a non-exempt beneficiary), Inheritance Tax will be payable on the amount that exceeds the nil-rate threshold. The current threshold is £325,000.
Every individual is entitled to a nil-rate band (that is, every individual is entitled to leave an amount of their estate up to the value of the nil-rate threshold to a non-exempt beneficiary without incurring Inheritance Tax). If you are a widow or widower and your deceased spouse did not use the whole of his or her nil-rate band, the nil-rate band applicable at your death can be increased by the percentage of nil-rate band unused on the death of your deceased spouse, provided your executors make the necessary elections within two years of your death.
Non-exempt gifts made within seven years
To calculate the total amount of Inheritance Tax payable on your death, gifts made during your lifetime that are not exempt transfers must also be taken into account. Where the total amount of non-exempt gifts made within seven years of death – plus the value of the element of your estate left to non-exempt beneficiaries – exceeds the nil-rate threshold, Inheritance Tax is payable at 40% on the amount exceeding the threshold.
This reduces to 36% if the estate qualifies for a reduced rate as a result of a charity bequest. In some circumstances, Inheritance Tax can also become payable on the lifetime gifts themselves – although gifts made between three and seven years before death could qualify for taper relief, which reduces the amount of Inheritance Tax payable.
The Financial Conduct Authority do not regulate inheritance tax planning.