What happens when someone dies?
When someone living abroad dies, the rules for paying Inheritance Tax usually depend on:
Monthly Archives: April 2015
Giving to charity
Reducing an Inheritance Tax – it’s good to give
A n estate can pay Inheritance Tax at a reduced rate of 36% on some assets (instead of 40%) if 10% or more of the ‘net value’ of their estate is left to charity.
What a relief
Assets that pass on free of Inheritance Tax
Inheritance Tax reliefs allow some assets to be passed on free of IHT or with a reduced bill.
Gifts
Small gifts that don’t create an Inheritance Tax liability
HM Revenue & Customs allows you to make a number of small gifts each year without creating an Inheritance Tax liability. Remember, each person has their own allowance, so the amount can be doubled if each spouse or registered civil partner uses their allowances. You can also make larger gifts, but these are known as ‘Potentially Exempt Transfers’ (PETs), and you could have to pay IHT on their value if you die within seven years of making them.
Paying Inheritance Tax
Estimating how much liability you could leave behind for your loved ones
Usually the ‘executor’ of the Will or the ‘administrator’ of the estate pays Inheritance Tax using funds from the estate.
Taking preventative action
Reducing your beneficiaries’ potential Inheritance Tax bill – or mitigating it out altogether
With careful planning and professional financial advice, it is possible to take preventative action to either reduce your beneficiaries’ potential Inheritance Tax bill or mitigate it out altogether.
History lesson
Inheritance Tax matters
Inheritance Tax was introduced in the UK in 1796 and stemmed from the influence of the French Revolution. The concept of IHT was supposed to protect poorer members of society and interrupt the legacy of inherited wealth.