Published On: Fri, Oct 4th, 2019

Inheritance Tax UK: What is threshold? Sajid Javid on ‘real issue’ with Inheritance Tax | Personal Finance | Finance

The estate – such as money, property and possessions – of a person who has died may be subject to Inheritance Tax. The standard Inheritance Tax rate stands at 40 per cent. However, it is only paid on the value of an estate which is above a certain threshold. This threshold is usually £325,000.

There are some instances where a person may have a greater threshold.

For instance, if a person has any unused threshold, then when they die, it can be transferred to their spouse or civil partner, should they have one.

Should a person own a home, or a share in it, their threshold can increase to £475,000 if:

  • The home is left to their children or grandchildren
  • Their estate is worth less than £2million

If the value of the estate does not exceed the threshold, then there is normally no Inheritance Tax to pay.

That said, the government website explains that it will still need to be reported to HM Revenue and Customs (HMRC).

Alternatively, if the deceased has left everything above the £325,000 threshold to their spouse, civil partner, a charity or a community amateur sports club, then Inheritance Tax wouldn’t usually be payable.

During a fringe event at the Conservative party conference, Chancellor of the Exchequer Sajid Javid was asked for his thoughts on scrapping Inheritance Tax.

“I shouldn’t say too much now but I understand the arguments against that tax,” he replied.

“You pay taxes already through work or through investments and your capital gains in other taxes, there is a real issue with then asking them, on that income, to pay taxes all over again.

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