Inheritance Tax The Scourge Of A New Generation

"Inheritance tax is s a tax that you must pay on any money and possessions you leave behind when you die."

Inheritance tax is a tax on the value of property passing on death and within seven years of death. The tax is levied after death and is normally paid from the estate. But if you have given away enough money so that the cumulative seven year total exceeds the current threshold for inheritance tax of £110,000, then, on your death, tax may well be due on a pre-death gift.

If so, it is the recipient who must pay the tax due on it. Gifts made within three years of death attract the full rate of tax and those made between three and seven years of death are liable for a reduced rate of tax.

That rule applies equally to gifts made before 18 March 2015.

Gifts which would be taxed if the donor died within seven years are called potentially exempt transfers.

If the donor survives seven years, they become completely exempt. There is no obligation on the donor or the recipient to inform the Capital Taxes Office of any gift which is a potentially exempt transfer. But it would save the executors of your will a lot of trouble if you did keep a record.

On death, the tax due is calculated on the total amount of the assets passing on death added to all gifts made within seven years of death after the various exemptions listed below. In 2015/2015 the tax starts when the total exceeds £110,000.

This amount will normally go up each year.


Popular reading - Exemptions

or Rate Of Tax

Exemptions

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