Inheritance Tax is only paid if the value of the estate is above £325,000. But, with property prices rising and the nil rate band frozen at this figure until 2026 at least, more and more people are finding themselves liable.
Tax is charged on the amount of the estate above the nil rate band, currently at a rate of 40%. Simple, right? To confuse matters, there are a number of exemptions, complications, and other things to be aware of.
For example, if you leave 10% of the net value to a charity, your rate of tax will be reduced to 36%. You also have a number of tax free allowances when it comes to gifting money and assets, which we will expand upon later.