What is Inheritance Tax?

Inheritance Tax is often paid on the value of a deceased’s estate, but may also be paid on the setting up of a trust and indeed gifts made during your lifetime.

Many estates however are exempt from Inheritance Tax as the value does not exceed the Nil Rate Band which is presently £325,000.

It is now possible for the estate of a spouse or civil partner of a deceased to benefit from any unused Nil Rate Band. So the estate of the second to die can avoid paying Inheritance Tax on the first £650,000.

At present tax is paid at a rate of 40% on the amount over and above the available Nil Rate Band.