Do I have to pay Inheritance Tax?

Losing a spouse, civil partner, family or friend is hard enough to come to terms with, but………..having to deal with Inheritance Tax might just be a step too far for many of us to cope with at such a difficult time.

What is the current Inheritance Tax rate in England?

The current Inheritance Tax rate in England and Wales is 40% on anything above the current £325,000 threshold, however, it can be reduced to 36% if 10% or more of the Estate’s net value is left as a gift to charity. The £325,000 figure is the current Inheritance Tax Threshold and is subject to change each year in the Budget. There is additional Inheritance Tax allowance for people who leave their home to their children or grandchildren.

In order to obtain a Grant of Probate part of the probate process is to collate all financial details of the deceased to consider and calculate as to whether there is in any Inheritance Tax payable. You will be required to complete the correct Inheritance Tax forms, which should be completed fully and thereafter submitted to the HM Revenue & Customs or to the Court. You will need to provide evidence to show that you have either paid the Inheritance Tax due or that there is no Inheritance Tax payable.

Who pays Inheritance Tax?

Inheritance Tax is usually paid from the Estate by the deceased’s Executors or next of Kin. The amount of Inheritance Tax that has to be paid depends on the value of Assets in the person’s Estate. Inheritance Tax is typically paid when a person dies having survived their spouse or civil partner and has left an Estate valued in excess of £650,000. For people who are not married or in a civil partnership the current Inheritance Tax threshold is £325,000.

When should Inheritance Tax be paid?

Inheritance Tax in England & Wales must be paid by the end of the sixth month after the person has died. Example: If the person dies in January, then Inheritance Tax must be paid to the HMRC by 31 July.

Normally Inheritance Tax is payable before Probate can be issued. The Inheritance Tax liability is normally paid from monies held by the deceased. If there are insufficient monies then it is sometimes paid by the family of the deceased. If you miss the payment date of the Inheritance Tax, then HMRC will charge interest on the monies payable and on top of the Inheritance Tax.  However, if too much Inheritance Tax is paid then HMRC will refund this money and will also include Interest payable.

If Fisher Jones Greenwood can assist and relieve the burden and pressures of Inheritance Tax, then please feel free to contact us on 01206 700113 or email [email protected] to arrange a mutually convenient appointment.