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UK Inheritance Tax Who Pays at What Rates

May 4, 2019 By Richard Farrell

Inheritance tax is something we would rather do without. However the government has the upper hand and the best we can do is choose any legal wiggle room we can find. If we leave money or other assets our heirs might otherwise have to fork out 40% of the value.

Inheritance tax applies to all our assets, whether they are property, savings or other possessions. The only things that can come off the total are funeral expenses and debts. However, it might be stretching things too far if your heirs take a luxury round-the-world cruise for the purposes of scattering your ashes.

Fortunately, the UK government does make a few concessions and we should grab them with both hands while we are alive. We can give away a portion of our money without paying tax. If this brings us within the tax-free allowance so much the better but do make sure you do this legally of course.

The 2019 to 2020 Thresholds and Rates

The standard rate is 40% of the amount over £325,000. This means if the taxable value of your estate is £405,000 your heirs take it on the chin for an amount of £32,000. However there’s a further break for couples married, or in a civil partnership.

If you leave your home or property to a family member, then you’re now allowed a transferable allowance of £175,000 representing a £25,000 increase.

Special Inheritance Tax Deals for Spouses

The UK government has come a long way towards regarding marriages and civil partnerships as shared estates.

The surviving partner may now apply both tax free allowances provided the deceased partner did not give away large amounts of money in their will. Moreover, under the new rules the surviving partner may now receive up to £650,000 from their late partner (or £960,000 including the deceased’s home).

Did You Know You Can Avoid Tax by Giving It Away?

If the idea of giving 40% away upon death really rankles, you can give some of it away before you die. You could for example buy your partner a swanky new car, or gift your charity with the cash equivalent. However, there’s a bit of a time bomb attached.

If you die shortly after your act of generosity, you gain nothing because the benefit gradually accumulates over seven years. That’s tough when we don’t know our sell by date but that’s the way the system works.

So Who Are the Lucky People Who Have to Shell Out?

Inheritance tax falls due the moment we die. This is raiding party on everything we own, less any money we owe and funeral expenses.

In theory, the beneficiaries of our gifts must pay the remaining inheritance tax themselves during the seven year window. As most of them have probably spent the money already, the government usually bills the estate.

Perhaps it’s good idea for recipients of these gifts to salt away 40% for a rainy day when their eyes are filled with tears. However they most probably won’t on the basis the estate will have money to cough up if they say their prayers nicely enough.

Filed Under: Probate Valuation Tagged With: inheritance tax free allowance, probate contents valuation, Special Inheritance Tax Deals for Spouses, ways to save on inheritance tax, £960 inheritance tax joint allowance

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.

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About Richard Farrell

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Client Reviews

Feb 1, 2021
by Sally Thompson on Avery Associates
Sensitive House Clearance

You have done an excellent job, given that you had very little time. Brenda and I do appreciate how much you have done and feel it is really kind of you... Read More

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Hoarded House Clearance

I would firstly like to thank everyone at Avery associates for their hard work . We called Jeff after the sudden death of my father. He was a "hoarder... Read More

Feb 1, 2021
by Jennie Adams on Avery Associates
House Clearance And Search For Valuable Items

We are very grateful to Jeff and his team for carrying out a clearance on a very cluttered relative’s house. He fitted in with our timeframe organising... Read More

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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.


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