Inheritance tax is the tax to be paid on the estate that someone left behind. Debts and outstanding bills can be deducted from the gross estate value. Inheritance tax is usually 40% of the estate value above the threshold.
No inheritance tax is due if:
- The value of the estate is below the threshold of £325,000 (or £650,000 if the nil rate band of a deceased spouse or civil partner is available to transfer)
- Everything above the threshold of £325,000 is left to one of the following:
- Spouse or civil partner
- A charity
- A community amateur sports club
If you give your estate to your children or grandchildren, including foster children, adopted children or stepchildren, your threshold may be increased further