Inheritance tax applies if the value of your estate exceeds the existing nil rate band upon your death – and everything above this will be charged at up to 40% to your loved ones.
We all have a nil rate band. Currently, if you’re single or divorced it’s £325,000, and if you’re a married couple it’s up to £650,000. If you’re widowed, it’s also up to £650,000 as you automatically inherit any of your partners unused nil rate band.
The above thresholds may sound a lot. But when you add the value of your entire belongings, you may be surprised by how much your estate is actually worth, now and in the future.
Did you know your estate can be made up of:
- Your home and furniture
- Jewellery and artwork
- A holiday home (in the UK or overseas)
- Savings and investments
Any liabilities, such as a mortgage or other debt, are deducted from your estate value.
Some areas of Inheritance Tax (IHT) Planning are not regulated by the Financial Conduct Authority. Some IHT planning solutions put your capital at risk so you may get back less than you originally invested. IHT thresholds depend on your individual circumstances and prevailing legislation, both of which may change in the future.