Critchley Hall News
Inheritance Tax - What you need to know......
What is Inheritance tax?
Inheritance tax, or IHT as it is commonly known, is payable on everything you own when you die.
Most estates don’t have to pay Inheritance Tax because they are valued at less than the threshold (£325,000 in 2009-10). IHT is payable at 40% on the amount of your estate that exceeds the IHT threshold. The threshold rises each year and will reach £350,000 in the 2010/11 tax year.
Transfers between spouses or civil partners are exempt from IHT. Unmarried partners, no matter how long-standing, have no automatic rights under the IHT rules.
Since October 2007, married couples or civil partners can effectively increase the threshold on their estate when the second partner dies - to as much as £650,000 in 2009-10. The executors of the estate can transfer the first spouse unused IHT threshold to the second spouse when they die.
Who is responsible for paying Inheritance Tax?
Inheritance Tax is payable by different people in different circumstances. Typically, the executor or personal representative pays it using funds from the deceased’s estate.
When does the tax have to be paid?
In most cases, you must pay Inheritance Tax within six months of the end of the month in which the deceased died. After this, interest will be charged on the amount outstanding.
You can pay in annual instalments over ten years if the value of the estate is tied up in property such as a house.