Introduction

Unfortunately even after we die we are not freed from the clutches of the taxman. During the 2007/2008 tax year, everything that you leave over £300,000 is subject to inheritance tax (IHT) at 40%. Nobody wants their beneficiaries to receive a hefty tax bill, particularly when there are measures that can be taken to reduce or even eradicate it.

What happens to your Estate when you die?

On death the assets of the estate are effectively ‘seized' by the Inland Revenue and are only passed to the beneficiaries once the tax liability has been paid.

To avoid interest being charged on the tax payable, the total liability usually has to be paid within six months of death.

What constitutes your Estate?

When the Inland Revenue calculates the inheritance tax liability on your estate, they take into account the following:

With the rise in house prices over the last few years, it is not just the very wealthy whose assets are worth over £300,000. It is therefore important to look at ways of ensuring that your IHT liability is as low as possible.