In the UK, at the time of writing, Inheritance Tax (IHT) may become payable where the value of ‘the estate’ (effectively the net worth) of an individual resident in the UK exceeds £325,000. If IHT is payable, it is usually paid out of the Estate by the Executor of the Estate or the Administrator of the Will.
Inheritance Tax, like most tax matters, can be a complex area and it is important to seek out specialist advice from your accountant or tax advisor sooner rather than later.
There are a variety of allowances or reliefs that may be available for the surviving spouse where one partner dies and, dependent upon the value of the estate and how the deceased’s assets are owned, there may well be no immediate tax to pay. In any event, it is likely that the Executor will need to apply for probate (in England and Wales) before the estate can be liquidated and assets distributed in accordance with any will.
The Inheritance Tax Rate is currently charged at 40% of the value of the estate in excess of £325,000, although this reduces to 36% where 10% of the estate is left to charity. There are a variety of allowances and reliefs available to an estate subject to Inheritance Tax and, for this reason, we recommend you take specialist advice. In particular, a surviving spouse may be able to claim relief on the immediate payment of IHT until after he/she has died also.
Many people owning property may consider it prudent to take advice when purchasing a property with their spouse or partner so as to avoid complications were one of them to die prematurely. This may include choosing how you wish to own your individual share of the family home and whether or not you take Life Insurance to help pay off all or part of the mortgage in the event of your death.
HMRC will usually demand Inheritance Tax is paid before they will release the estate’s assets and being unable to sell a home within the required time frame is not generally a good enough excuse not to pay IHT due! In some cases the Executor of the Estate may need to consider mortgaging or remortgaging property held within the estate so that IHT may be paid and tax penalties are avoided.
Once you have taken tax advice, we would be happy to help you consider the mortgage options available for this purpose.
Related articles:
Download our Free First Time Buyers Guide
Recent posts
We look at why mortgage rates increased following the Bank of England's choice to reduce the bank rate, and should you fix now?
UK 2024 Autumn Budget: Housing
18 days ago
On 30th October 2024 the Chancellor, Rachel Reeves delivered the Autumn budget which we had previously been warned would be “difficult”. Below we have summarised the main housing points.
Talking about money with kids
25 days ago
In an increasingly cashless society, money is an intangible concept for children to grasp. In the days of coins and notes, kids could see money as something physical you require to purchase goods and services.
In order to help teach your children about money, we have listed some tips below;
Labour Autumn Budget Predictions: Housing
18 Oct 2024
The UK’s chancellor, Rachel Reeves will deliver the Labour government’s autumn budget at the end of the month, we take a look at what could be announced in relation to housing.
Recent research from Halifax has revealed the most sought-after locations for first time buyers in Britain.
The data which was taken from the Halifax House Price Index looked at areas outside of London where those looking to purchase their first property were buying. Despite high property prices and increased rates, these first time buyer hotspots have remained popular.
How can I look after my mental health?
7 Oct 2024
Taking care of your mental health means looking after your emotional, psychological, and social wellbeing. There are several ways we can practice self-care that will help to improve our physical and mental health. This can help to reduce our risk of illness, manage stress, and boost our energy levels!
First Time Buyer to do List
4 Oct 2024
Buying your first home is very exciting but it can also be very daunting which is why we have set out a “to do list” to help you get started.
Bank of England Holds Base Rate at 5%
20 Sep 2024
With UK inflation remaining at 2.2% which is slightly above the Bank of England’s 2% target, the decision was made on Thursday 19th September to keep the base rate at 5%.
More information
Trusted by
