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What is Inheritance Tax?
Inheritance Tax is tax paid on the value of property, land and money that belonged to someone who has died. These assets are called their ‘estate’. Inheritance Tax is only payable on estates over a certain value.
In 2012, Inheritance Tax is payable on all estates valued at over £325,000.
If you are the executor or representative of a person who has died, you are responsible for paying any Inheritance Tax that is due.
The estate also includes any gifts that the deceased has made during the last seven years of their life, with certain exceptions. These exceptions include direct bequests to a spouse or civil partner, and gifts made to certain charities or political parties.
If the person who has died is married, or has a registered civil partner, that spouse or partner can increase their own threshold for Inheritance Tax, depending on the amount of Inheritance Tax that was initially paid. In practice, this means that a couple’s threshold may be up to twice that of an individual.
Inheritance Tax is typically complex and seeking financial advice is recommended to ensure that you are being as tax efficient as possible.
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