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Inheritance Tax In The Uk
Inheritance tax in the UK is payable when a large valued estate is handed over to a person, persons or business entity. Inheritance tax is usually due, or will potentially be due, when a person dies. There are also other occasions when it could be due, such as – when assets are transferred to a company or discretionary trust. Even if you are not due Inheritance tax, because the amount is too small, you will still have to fill out a grant of representation. There are certain instances where this is not required, but for the most part you will have to.
Inheritance tax acts as a major burden on larger estates than it does on smaller ones. With larger rises in property rises, it can impact sums of money by a very significant percentage. The tax becomes larger as a percentage as the amount increases. For example, on the top tier of a 300,000 pounds inheritance you could expect to pay 40%.
Inheritance tax also applies for marriages and is due when the amount passes a certain threshold in terms of gifts the married couple receives from family and friends. As a parent you are allowed to give a gift for up to 5000 pounds and anything over will be taxed accordingly. Like wise, you will be due tax on any money you receive from grandparents over 2,500 pounds and 1,000 from friends who are not related to you.
When Do You Pay Inheritance Tax and what is the Threshold?
If the value of a gift is below the threshold then you do not have to pay inheritance tax, however that varies and is not fixed. Certain types of estate do not require tax to be deducted so that must become a factor in your calculation. The items that do not require tax deduction include shares in companies which are not quoted on the stock-market (private limited companies, sole proprietorships and partnerships) and the amount which it costs for the funeral in the case that you have inherited estate from someone who has died.
What are the Late Payment Charges?
Late payment is charged on any payment which is not paid by the due date. No matter what reason is to blame, such as not being able to get the money, shares or property on time. In the instance where you do have to make late payments they are usually fairly reasonable, around 5%. This is around the same value which you would accrue in a bank account; therefore the government is getting the money they would otherwise get from a bank if it was placed there. If you are inheriting the money from a bank account and get paid late, you will likely have accrued a similar amount of money there.
Who Has to Pay Inheritance Tax?
The person or persons who are getting the money have to pay the inheritance tax; therefore if you are listed in the will then you are responsible. You are due to pay inheritance tax based on the percentage of the taxable estate which you are set to gain.
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