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
Research from buy-to-let lender, Landbay, shows that UK landlords are looking at raising rents ahead of the Renters' Rights Bill which is due to come into force this year.
Data shows landlords could miss out on green mortgages due to expired energy performance certificates.
Buying a house is a big deal, and where you are planning to buy will make a difference financially. In this short blog, we look at the most affordable and most expensive areas and how much you need to be earning to buy in there.
Pros and Cons of Equity Release
15 days ago
Equity release is a type of mortgage that allows homeowners 55 and over to access money from their property's equity without having to leave their home. This is done by securing a loan against the house which is usually repaid by selling the property when the borrower passes away or has to move into long-term care.
Your House Viewing Checklist
16 days ago
It’s important to ask questions about the property you are interested in before taking that step to make an offer. A little probing can make all the difference between buying your dream house or something that requires a lot of work.
Half of over 60s predicted to benefit from accessing housing wealth through Equity Release
19 days ago
There are millions of homeowners over the age of 60 who are likely to release money from their homes to pay for their lifestyle during retirement giving those who are 'asset rich but cash poor' a way to live out their retirement the way they wish.
Average Age of the First Time Buyer in the UK
26 days ago
The average age of a first-time buyer in the UK is two years older than 10 years ago. This is understandable with managing the cost-of-living and challenges within the economy such as high interest rates making it difficult to get onto the property ladder.
Delayed Start Mortgage from Skipton
28 days ago
Skipton Building Society launches ‘Delayed Start’ mortgage meaning first time buyers won’t be required to make repayments for the first three months.
According to a survey by Skipton, first time buyers who bought their home in the last five years found that in the first three months of living there, they were spending upwards of £30,000.
More information
Trusted by
