IHT Fact Sheet
On death, no Inheritance Tax is payable on the first part of an individual’s estate, known as the Nil Rate Band.
The Nil Rate Bands are: 20008/09 2007/08
£312,000 £300,000
Inheritance Tax (also known as IHT) is calculated at 40% of the balance over the Nil Rate Band.
However, most transfers between spouses or civil partners are exempt from IHT irrespective of value. If you are married or in civil partnership, you may wish to leave your entire estate to your spouse/civil partner, but this may not be as tax efficient as it seems.
Joint Tenants – Joint owners own their property together in such a way that, if one of them dies, his or her interest in the property passes to the other joint owner automatically, regardless of the terms of the Will. This has serious implications where you own assets in partnerships.
Tenants in Commons – Joint owners own their property together, but each is treated as having a separate share in the value of the property. If one of them dies, his or her interest in the property does not pass automatically to the other joint owner but instead will be dealt with under the terms of the Will or, if no Will, under the rules of intestacy.
Severing the joint Tenacy – where joint owners hold property as joint tenants, it is possible for them to alter the way they hold the property so that they become tenants in common, by severing the joint tenancy. We are associated with a firm of Solicitors, who can advice you on this.
Probate – Before any of your estate can be administrated, a probate certificate is necessary. This can only be obtained after paying the full inheritance tax liability at 40% on the taxable estate. Ironically, this is the only tax which can be fully avoided.
The contents of this fact sheet are based on our understanding of current law and Inland Revenue practice at the time of printing. Future changes in taxation, tax levels and practice could affect the details quoted.
