Published On: Wed, Sep 4th, 2019

How much Inheritance Tax will I pay on £50,000 above threshold? Thresholds explained | Personal Finance | Finance


Inheritance Tax is usually paid on a deceased person’s estate which is worth more than £325,000. The estate can include property, money, and possessions. There is normally no Inheritance Tax to pay if the value of the estate is below this threshold. If a person leaves everything above the £325,000 threshold to their spouse, civil partner, a charity, or a community amateur sports club, then there is normally no Inheritance Tax to pay.

Some people may have a greater threshold, such as if they give their home to their children or grandchildren.

In this situation, if the estate is worth less than £2 million, then the threshold can increase to £475,000.

Should a person’s estate be worth less than the threshold, and they’re married or in a civil partnership, then any unused threshold can be added to the partner’s threshold when they die.

This means that the threshold could reach as much as £950,000.

The standard Inheritance Tax rate is 40 per cent.

It is only charged on the portion of the estate that is above the threshold.

If a person’s threshold is £325,000 but their estate is worth more than £375,000, and exemptions or reliefs do not apply, then Inheritance Tax may be payable on the £50,000.

This works out at £20,000 being payable to HM Revenue and Customs (HMRC) in Inheritance Tax.

That said, it may be that the estate can pay Inheritance Tax at a reduced rate of 36 per cent on some assets, if one eaves 10 per cent or more of the “net value” to charity in their will.

The funds are required to be paid to HMRC ahead of the deadline, otherwise interest may be charged.

This due date is the end of the sixth month after the person died.



Source link

Most Popular News