Avery Associates

House Clearance & Probate Valuation Services


  • HOME
  • HOUSE CLEARANCE
    • Probate House Clearance
    • House Clearance
    • FAQ
    • Hoarder House Clearance
    • Garden Clearance
    • Charity Donations
    • Recycling
    • House Clearance Gallery
    • Our Locations
  • PROBATE VALUATIONS
    • PROBATE HELP
      • Probate Valuation Guide Fees & Advice
      • Probate House Clearance
      • Executor Assistance
      • Solicitor Assistance
      • Our Locations
    • Probate Valuation Explained
    • RICS Property Valuation
    • Classic Cars
    • Jewellery
    • Coins
    • Books
    • Stamps
    • Vintage Toys
    • Records
  • REVIEWS
  • NEWS
  • ABOUT
  • CONTACT

How to Calculate UK Inheritance Tax Correctly

October 1, 2021 By Richard Farrell

Inheritance tax is a toll the UK government levies on deceased estates within its ambit. An executor, or another responsible person is legally obliged to make a full and honest account. Should they fail to do so, and the government is out of pocket then it could hold them personally responsible. If you find yourself in the role of executor, it’s important to know how to calculate UK inheritance tax accurately.

A Deceased Person’s Estate for Purposes of Inheritance Tax

A deceased person’s estate comprises all their possessions at the time of their death. However, flat rate estate duty may not apply to all of them depending on their nature and value. There may no inheritance tax due at all provided:

1… The value of the estate, as calculated under guidelines is below the £325,000 threshold.

OR

2… Anything above that value passes to the spouse, civil partner, a charity or a community amateur sports club.

However, it’s still necessary to report the estate to the HM Revenue and Customs. This is why you need to know how to calculate UK inheritance tax, regardless of the value of the estate.

It Helps to Know How to Calculate UK Inheritance Tax

The rate of inheritance tax is 40%. However, this is not across the board. You only pay it on the amount over the threshold. Let’s say for example the value of an estate is £500,000.

1… The above-threshold amount is therefore £175,000

2… The estate duty is thus £70,000 (40% of £175,000)

There are however several ways you may be able to avoid the above-threshold inheritance tax legally.

GIFTS TO CHILDREN

If you give your home away to your natural, foster, or step child or children – and you survive another seven years – your inheritance tax threshold could increase to £500,000.

PARTNER THRESHOLD SHARING

Married partners, and those in civil partnerships have ‘virtual thresholds’ of their combined value. If the first of them dies without using all of theirs, then the balance credits to the other.

OTHER WAYS TO REDUCE YOUR LIABILITY

There are other ways to reduce your debt, although these are beyond the scope of a general introduction to how to calculate UK inheritance tax . You may wish to seek specialist advice if you need assistance in valuing an estate for probate purposes.

Paying Your Dues Across to HM Revenue and Customs

The UK tax department has its customers cornered on this one. An executor needs an inheritance tax clearance before they get can past the first base of winding up an estate.

1… The tax is normally paid out of the estate. However, if the funds are locked up in assets, the tax authority is usually open to negotiation. Under some circumstances the executor, or a third party may advance the funds.

2… Beneficiaries of the estate do not normally pay tax on their inheritance. They may however have additional taxes as a result, for example rental from property or income from investments.

3… Gifts given to people prior to passing – including property – may incur inheritance tax if they total more than £325,000. But this is only the case if the person making the gift dies within seven years after the donation.

how to calculate uk inheritance tax

Dog Tax Gatherers in Search of Puppies (1796) I Cruikshank via British Museum

But There Is More to Passing on a Home Than That

A home is often the largest asset in any estate. It is therefore unsurprising homes receive special attention at HM Revenue and Customs.  This is another reason why knowing to how to calculate UK inheritance tax can save you money legally.

PASSING A HOME TO A PARTNER

Married couples, and those in civil partnerships can pass their homes / shares in them to their partners when they die. In this case, there is no inheritance tax to pay on that portion of their estate (although there usually are legalities to pay).

PASSING YOUR HOME TO YOUR KIDS

There are also ways to reduce your tax obligation by leaving your home to your natural child / children, including adopted, foster or step kids.

1… Your threshold could increase to £500,000

2… But only if your estate is worth less than £2 million

PASSING A HOME TO A THIRD PARTY

However, if you leave your home to a third party in your will, then it remains part of your estate for tax purposes.

GIVING YOUR HOME AWAY BEFORE YOU DIE

There is nothing to stop you giving your home away. Although someone still has to pay to register ownership, and perhaps capital gains tax too especially if you die within 7 years. But do remember if you want to stay on, you will need to pay rent and your share of the bills.

Where to Get More Advice on Valuation and Probate

Avery Associates assist estate executors with probate advice, insurance valuations, and complete home clearances. We are active throughout the South East of England. Follow one of these links to your nearest service point.  We assure you of our best attention at all times.

More Information On Probate and Valuation

Offshore Estate with UK Assets? Resealing a Foreign Probate Grant

Mental Capacity Affecting Ability to Make Decisions

Read Avery Associates reviews to confirm our service level..

Related

Filed Under: Probate Valuation, Probate Valuation Questions And Answers Tagged With: calculate, duty, england, estate, exceptions, exemptions, inheritance tax, rules, united kingdom, wales

Our House Clearance Services

We provide a full house clearance and property management solution:

  • We clear hoarded houses, regardless how big or how cluttered
  • We clear all types and sizes of property, irrespective of location, or access is restricted or where parking is difficult or not available.
  • We can help avoid water damage by draining the central heating system.
  • We can secure the property and change the locks.
  • We can reinstate the gardens and maintain them whilst the property is empty.
  • We can provide 24 hour security to eliminate the risk of squatting or unlawful occupation.

As well normal house clearances we specialise in clutter clearance and we can clear a hoarded house which may contain years of accumulated possessions, or which have abnormal amounts of general household items, sometimes as a result of compulsive hoarding syndrome.

Equally we can help to clear a property where the occupants were previously unwell and unable to care for themselves or their property which sometimes results in insanitary, dangerous or just plain unpleasant conditions.

More info

About Richard Farrell

What We Do

Get A Quick Quote

Client Reviews

Jenny Schon
Dec 3, 2021
 by Jenny Schon on Avery Associates
Well done

This truly is a 'one stop shop' for all things relating to Probate valuations and clearance. Jeffrey is a 'facilitator' and full marks to him for finding... Read More

Kevin Anderson
Oct 26, 2021
 by Kevin Anderson on Avery Associates
Fantastic and Reliable

Our aunt was a recluse and hoarder. She died leaving two properties in London that were dilapidated and completely hoarded. Unfortunately, because everything... Read More

It was a pleasure to assist Kevin

T. Hackett
Aug 26, 2021
 by T. Hackett on Avery Associates
1st Class Service

Avery Associates Appraisal I have just moved house after almost 30 years of occupation. My initial choice of movers, Pickfords, decided at the last... Read More

Page 1 of 44:
«
 
‹
 
1
2
3
›
 
»
 

Share, Email or Print

Looking For Something?

Our Latest News & Advice

  • Thought I Had Seen Everything Until I Visited Walsall
  • How to Apply for Probate in England and Wales
  • England’s Ambitious Waste Plan by Jeffrey Avery


Avery Associates
291 Mitcham Rd
Tooting SW179JQ

Tel: 0800 567 7769 or 0208 640 0044

Services provided throughout London and the Home Counties. View our clearance case studies.


Website Terms | Privacy Policy | Sitemap | Copyright © 2005-2018 Avery Associates
Website Development by Avara Web Media

 

Loading Comments...
 

You must be logged in to post a comment.