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Inheritance Tax Planning is brought to you by
Invest & Protect
For more help and advice please call one of our expert
advisors on
0800 0833277 |
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What is Inheritance Tax.
Inheritance tax has been described as a voluntary tax paid by those
who distrust their heirs more than they dislike the Inland Revenue.
Yet, more than £2bl per annum is collected in inheritance tax every
year by the Inland Revenue.
Inheritance Tax is a tax on an individuals assets on death when they
are transferred to someone else.
Currently there are two levels of tax there is a zero rated level
which is the first £275,000 and then anything amount over £275,000 is
taxed at a rate of 40%.
Do be aware that the first £275,000 is classed as zero rated, it is
not tax free. This means that the government can introduce a lower
level of tax on this amount in the future but currently they choose to
tax it at a zero rate.
It is important to bear in mind that the tax is due on the assets
on
death regardless, up
to a period of 7
years, when the transfer takes place. This means that if you transfer
an asset to someone and then subsequently die within 7 years then some tax is
due, it is however on a sliding scale and that scale is below.
This is commonly known as the 7 year rule and is effective as
follows:-
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Time Death occurs after gift is made
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% of tax due
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0 to 3 years
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100% |
3 to 4 years
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80% |
4 to 5 years
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60% |
5 to 6 years
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40% |
6 to 7 years
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20% |
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