Question: What is Inheritance Tax?
Mark’s Answer
Inheritance Tax (IHT) is a tax payable from a deceased person’s estate when they pass away. Tax is payable usually at 40% charged on the excess above the IHT thresholds and exemptions/allowances available to the deceased’s estate.
The current single standard IHT threshold is £325,000 (January 2024). The deceased may also qualify for the Residence Nil Rate threshold which is currently a maximum of £175,000. The deceased’s estate may also qualify for Transferrable Nil Rate Band as well as Transferrable Residence Nil Rate Band.
Exemptions include spouse exemption, charity exemption, Business Property Relief, Agricultural Property Relief, and Gifts out of income. The rate of IHT may also be reduced in certain circumstances.
Question: What would happen if I died without making a will?
Mark’s Answeres
If you die without leaving a valid will, your estate will be administered and distributed under the Intestacy Rules which set out the order of beneficiaries who inherit on intestacy. The order varies depending on the categories of the family members you leave behind.
This may not meet with your wishes and your estate may pass to those members of family that you do not wish to provide for and/or the amount that passes may not be adequate.
It could cause unnecessary difficulties for the family and loved ones you leave behind and can result in unnecessary expenses and larger legal fees.
Question: It does seem like retirement is a long way off for me, but what should I start to do and what do I need to look for?
It is never too early to start planning your retirement. You should consider making and reviewing your Will, Powers of Attorney and Estate/Tax planning. It is often a good idea to consider these by consulting a lawyer and a financial adviser.
Meet our expert…
Mark Morton is a residential property licensed conveyancer for Copley Clark (the trading name of Parfitt Cresswell). He has a career spanning two decades and joined Parfitt Cresswell in February 2020.
If you would like to ask him or one of his colleagues a legal question connected to your home or related finances email kate.saines@emap.com
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