Inheritance tax (IHT)
Inheritance Tax is a tax on the estate (the property, money and possessions) of someone who’s died. There’s normally no Inheritance Tax to pay if either:
the value of your estate is below the £325,000 threshold or you leave everything to your spouse or civil partner, a charity or a community amateur sports club.
If you give away your home to your children (including adopted, foster or stepchildren) or grandchildren, your threshold may increase to £500,000. If you’re married or in a civil partnership and your estate is worth less than your threshold, any unused threshold can be added to your partner’s threshold when you die. This means their threshold can be as much as £1,000,000.
Inheritance Tax rates
The standard Inheritance Tax rate is 40%. It’s only charged on the part of your estate that’s above the threshold.
Example
Your estate is worth £500,000 and your tax-free threshold is £325,000. The Inheritance Tax charged will be 40% of £175,000 (£500,000 minus £325,000).
Consider a legal professional or a solicitor to get advice.