A deceased person’s estate can include their possessions, money, and property. In some cases, the value of the estate may exceed the threshold – which is normally £325,000. If everything above this threshold has not been left to a spouse, civil partner, a charity, or a community amateur sports club, then it may be that there is Inheritance Tax to pay. That said, it’s possible for a person to have increased their Inheritance Tax threshold.
The standard Inheritance Tax rate is 40 per cent.
This is only charged on the part of the estate which is greater than the threshold.
It could be that the estate pays Inheritance Tax at a reduced rate on some assets if one leaves 10 per cent or more of the “net value” to charity in their will.
Normally, beneficiaries, meaning the people who inherit the estate, do not normally pay tax on things they inherit.
That said, they may have related taxes to pay.
Funds from the estate are used to pay Inheritance Tax to HM Revenue and Customs (HMRC), the government website states.
The person who deals with the estate will do this. They are called the “executor”, if there’s a will.
The government website explains that if a person has an Inheritance Tax bill to pay, then it must be paid by the end of the sixth month after the person died.
For example, if the deceased died in January, then they must pay the tax by July 31.
There are different due dates in one makes payments on a trust.
Elsewhere in tax news, HMRC recently issued a warning about tax refund scams.
A post on the @HMRCgovuk Twitter warned that scammers can send fake tax refunds imitating university email addresses ending in “.ac.uk”.
HMRC reiterated that it never contacts taxpayers about tax refunds by email, text, or voicemail.
Head of Digital Safety at Barclays, Ross Martin, has also shared some top tips for anyone looking to protect against tax scams – including watching out for the inclusion of one key number.
Mr Martin said: “If HMRC contact you, they will also include, or let you know, your taxpayer reference number.
“If someone contacts you and is unable to provide this information, it is likely to be a scam.”