What is Inheritance Tax?
Inheritance Tax is a tax on money and other possessions such as property that are passed from one person to another.
Only people with a certain amount of wealth have to pay Inheritance Tax and, most of the time, it is paid once a person has died. Their money, together with the things they own, which is known as their estate, is valued and, if it is worth over a certain amount, Inheritance Tax has to be paid.
Sometimes, Inheritance Tax also has to be paid when a person gives money or a high-value item to someone else during their lifetime.
Inheritance Tax isn’t usually paid if things are being passed to a spouse or civil partner. There are also a number of other exemptions such as gifts to charity.
How much is Inheritance Tax?
Inheritance Tax is generally charged when total transfers exceed £325,000. It is charged at a rate of 40% on death but sometimes at a rate of 20% when large gifts or transfers are made during lifetime.
Where can I find out more?
Inheritance Tax is complicated. To find out more about what needs to be paid and when, see the HMRC website.