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Inheritance tax is a tax on death but tax is only payable if the deceased has assets of more than the relevant nil rate band exemption at the date of death currently £312,000.  Above this level tax is payable on death at a rate of 40% on the excess.   However in relation to deaths occurring after 9th October 2007 this nil rate band exemption is increased on the death of a widow, widower or civil partner prorata to the percentage amount of the unused nil rate band exemption of the predeceased spouse or civil partner.   For example if a wife or surviving civil partner was left all of the assets of a predeceased husband or civil partner (as all gifts between spouses and civil partners are exempt anyway) the available additional allowance on the death of that wife or surviving civil partner in that situation would be 100% so the nil rate band available on the death of the survivor is uplifted by 100% ie £312,000 x 2 = £624,000.

Wilson Nesbitt can explain the various exemptions which include gifts between husband and wives, gifts made out of current income, gifts of business or agricultural property, gifts to heritage bodies, churches or charities, "nil rate band" gifts and annual allowance gifts. Inheritance tax has to be paid before either the Grant or Probate of the Will Court Order or the Letters of Administration Court Order will be issued.

In addition to Inheritance Tax there are other forms of tax liability that are chargeable on deceased estates.  Liability for outstanding income or other taxes pass on to the personal representative, the person named as the executor in the Will or appointed administrator by the court.  Tax Liabilities go back at least seven years.

If a distribution of assets is made without tax clearance the personal representatives are personally liable to pay the tax even if they have given away all the money and assets.  We will ensure all tax files are closed and any outstanding tax paid or refund claimed before distribution of the assets.  If the deceased was a taxpayer the estate can claim the full tax allowances for the financial year of death, even if the death occurred during that year so more often than not refunds are due to the estate.

If you would like more information please contact one of our experienced team members profiled on the right of this web page, telephone 0800 056 0536
or email probate@wilson-nesbitt.com.

 

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Updated Daily: Monday July 14th 2008