Inheritance Tax
Solicitors in Essex & London
The calculation of an inheritance tax liability in its simplest form is relatively easy to understand. In basic terms, everyone is entitled to an inheritance tax allowance known as a nil rate band - the current allowance is £325,000. In the most straightforward of cases, the value of the estate in excess of the nil rate band is liable to inheritance tax at a rate of forty percent. For example, if a person dies leaving assets worth £400,000, the first £325,000 will pass tax-free to the estate beneficiaries and the balance of £75,000 is liable to inheritance tax at a rate of forty percent, giving rise to an inheritance tax liability of £30,000. Our specialist Wills and Probate solicitors in Essex and London have expertise in dealing with inheritance tax and ensuring that Personal Representatives fulfil their strict legal obligations with HMRC.
There are many factors that determine the amount of inheritance tax that may be payable on death. A combination of lifetime estate planning, complex family structures and ever increasingly complex tax legislation means that inheritance tax calculations can be complicated. Executors and administrators need to exercise particular care calculating a tax liability when:
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Lifetime estate planning has been carried out - this includes any gifts that the deceased may have made during their lifetime, the creation of any lifetime trusts or the investment of funds in certain financial investment products
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The deceased was widowed
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The deceased owned a residential property
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The deceased was a beneficiary of a trust that they benefitted from during their lifetime
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The deceased lived abroad
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The deceased owned foreign assets
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The deceased owned business or agricultural assets
Inheritance tax is calculated based on the valuation of the estate as at date of death, however, in some circumstances, the tax position may subsequently change. For example:
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When property or shares are sold after death at less than the date of death value
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Unknown assets are discovered
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Unknown debts are discovered
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If there is a dispute with HMRC about the valuation of estate assets – this is more common with properties or business interests
As such, is it is possible that an inheritance tax liability may increase or decrease after death. Executors and administrators have a legal duty to ensure that all details of an estate are fully disclosed to HMRC, that the correct amount of inheritance tax is paid and that they fully co-operate with any enquiries that HMRC may bring.
Our specialist probate solicitors include full members of STEP (Society of Trust and Estate Practitioners). Membership of STEP is recognised by the legal profession as a kite mark of excellence in the area of estate administration and personal taxation. Our lawyers are able to provide a high level of expertise on all aspects of inheritance tax advice, as well any related income tax and capital gains tax issues.
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