The Inheritance Tax is nothing more than the real estate tax most often of a deceased person. Few people have a lot of money on their account.
You don’t have to pay a tax when:
The value of your property is less than 325,000 pounds.
If you give your home to your life partner, charity, stepchildren, grandchildren
It is worth adding that if you decide to give your children home, your grandchildren will raise the threshold to 450,000 pounds.
What is the rate of inheritance tax in the UK?
At the moment, the tax rate is 40%, of course, after taking into account the free amount.
If your property is worth 400,000 pounds, we deduct 325,000 pounds from this amount, so it’s easy to calculate that 40% tax should be paid only for 75,000 pounds.
400,000 is a significant amount and people living in London more often have real estate in such amounts. In the area where I live, houses for this price are already bought by very wealthy people.
Most people in the UK don’t have to worry about the inheritance tax, because most don’t have significant assets. That’s right, not everyone works in a warehouse, but statistically most people earn below the national average.
Data for 2016 (based Commons Briefing papers CBP-766:)
28% – elementary occupations
20% – process, plant and machine operatives
17% – skilled trades occupations
10% – caring, leisure and and other service occupations
7% – administrative and secretarial occupations
NOTE: There’s a very good and cheap way to avoid the inheritance tax. Be sure to find out what the Trust is.
Who has to to pay tax?
Of course, your assets are intended to pay the tax. This is done by a person called 'executor’ assuming that a will was made and I don’t think about the executor from Tesco for 5 pounds.
You will learn more about wills from the article: Is it worth using online generated documents?
Usually people, who inherit something, don’t have to pay tax. Unless you inherited the properties that are rented, then you are the landlord immediately.
Is it worth dying in Poland?
If you decide to move out of the UK (permanent residence outside of the UK), then the taxi s applied to assets only in the UK.
However, the famous half-year isn’t important for the tax office in this matter:
If you live in the UK for 15 of the last 20 years
You’ve had a permanent home in the UK at any time during the last 3 years of your life
Your 'executor’ can recover tax if it has been collected in two countries and they have a treaty to avoid double taxation, which happens between Poland and Great Britain.
Start using your head
The above rules apply to ordinary people who are interested in the inheritance as it is after the fact. Other rules apply to the more clever people who secured their property in the Trusts.
I’ll write about Trusts by the way, if there is an interest in this topic. And I wrote this article, because the reader wrote to me asking: how much is the inheritance tax? Now I’ll have an article prepared if I get the same inquery again.
Inheritance of debts is another interesting subject and you should get interested in the free time as the inheritance tax and try to think about it earlier.
All information comes from gov.uk. To find out the details, I recommend talking to a tax advisor
NOTE: I present private opinions and I am not responsible for the readers’ decisions. I always try to present current information but may no longer be up to date. Therefore, before making a decision, please verify them and consult a licensed financial adviser.