Tax on the inheritance of property has existed in the UK since probate duty was first introduced in 1694. But it’s only in recent years that it has become a significant consideration for large swathes of the population. While house prices have escalated, inheritance tax thresholds have remained the same or even reduced. More people now face the prospect of falling foul of inheritance tax legislation than ever before.
Unfortunately, although many retired people would love to see inheritance tax abolished, there is no prospect of that happening soon. While the British government has stated that inheritance tax should be limited to the “very rich”, the current threshold still stands at £325,000 per person – with the figure doubling to £650,000 for a married couple.
This paltry figure means that virtually anyone with a property in London will find their estate subject to inheritance tax. The executor of your will calculates the value of your estate, taking all assets into account. The value of assets over £325,000 per person is subject to tax at the standard rate of 40%. For example, if the executor values your estate at £500,000, an inheritance tax bill of £70,000 applies.
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