Inheritance Tax

Inheritance Tax (IHT) is a tax that is applied to the estate of a deceased, where it is applicable.

IHT is paid to HM Revenue and Customs (HMRC) from funds of the estate by the executor of the Will – or their representative, if they have appointed an authorised firm (like Get Probate) to deal with the probate process on their behalf.

Any Inheritance Tax that is due will need to be paid from the estate before any of the beneficiaries of the Will are entitled to receive any assets or money from the estate.

There is no Inheritance Tax to pay when the value of the estate is below the current threshold of £325,000 or where everything is passed to the spouse or civil partner of the deceased.

This threshold can be increased to £650,000 by transferring any threshold that was not used by a spouse or civil partner of the deceased.

It is for the executor of the Will, or their representative, to calculate the estate’s assets and gifts (using a professional valuer for anything worth over £500) and all the liabilities / debts.

Where there is Inheritance Tax to pay, it is normally charged at 40% on the value of the estate above the relevant Inheritance Tax threshold.

An IHT400 form will need to be completed and returned to HM Revenue and Customs by the executor, or their representative. They can calculate the IHT themselves – if HMRC disagree with the calculation, they will send you a revised bill – or they can ask HMRC to work it out from the information and send a bill.