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Inheritance Tax Guide
The VAT is an acronym for Value Added Tax. It is a sales tax that is added to goods and services in the UK. When you sell something, you are responsible for collecting the tax and sending it in to the government.
1. What is the UK Inheritance Tax?
In the UK, you have to pay tax on any inheritance with a value that exceeds £275,000. This amount is called the Nil Rate Bond. The amount of the value of the estate that is over £275,000 is subject to a tax rate of 40%.
2. What is the value of having a will?
For married couples it is extremely important to have a will. When estates and properties are transferred to a surviving spouse in a will, there is no tax on the estate no matter what the value is. This is called the Inter-spouse exemption rule. While each partner's estate is assessed at the time of death, a married couple is has a Nil Rate Bond of £550,000, which gives them a higher threshold before any taxes have to be paid.
3. How does the UK Inheritance Tax affect joint assets?
For married couples, the largest joint asset is usually the family home. Joint assets pass directly to the surviving spouse and do not come under the will. If the property is held as property in common, either of the partners can give it to the other as a gift. In this case, the couple can sever the joint ownership of the home so that each can give part of it as a gift to the children. This means that the 50% share can still be used towards the Nil Rate Bond for tax purposes.
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