Inheritance Tax - and what you have to pay

When you’ve spent a lifetime working and saving to make life more comfortable, there inevitably comes a time to pass everything on to the next generation.

It’s never the easiest thing to discuss… but some of your hard-earned legacy could go straight to the Treasury as tax instead of to the people you wanted to benefit from your estate.

Here's the low-down on how to get things in good order.

How much Inheritance Tax will I have to pay?

If what you leave is worth more than £325,000 (including your home, car, savings and valuables), then the executor – the person who ensures the wishes of your Will are carried out – will have to clear the tax bill before any inheritance is released.  

The standard Inheritance Tax rate is 40%, which is charged on the part of your estate that’s above the threshold. Yet if you plan ahead, there are ways to reduce that tax liability.

Our carefully chosen partner Wren Sterling can help. They’re experts on sensible financial planning and can advise on all the ins and outs to make sure more of your money does what you want it to.

Does my spouse or partner automatically get everything?

There is normally no Inheritance Tax to pay if either:
  • The total value of your estate is below £325,000;
  • You have a valid up-to-date Will and leave everything to your spouse or civil partner, a charity or community amateur sports club. If you do NOT have a valid Will, your spouse (including civil partners) may not automatically get everything. Unmarried partners have no automatic legal entitlement to your estate.
What will happen to my house?

When you pass a home to your husband, wife or civil partner when you die, there’s no Inheritance Tax to pay on this.  But if you leave it to someone else through your Will, its worth will be part of the total value of the estate. There are separate rules if you give away your home before you die.

Is anything exempt from Inheritance Tax? And can I simply give my money away now?

Wren Sterling can help you make informed decisions about passing on your home and other ways of protecting your hard-earned cash.

Options include: 

  • Making sure you’ve written a Will – and that it’s up-to-date; 
  • Ensuring your property is owned correctly, and easy to organise for inheritance purposes; 
  • Using tax-free gifting to transfer assets during your lifetime. It’s good to get advice because some gifts you give while you’re alive may still be taxed after your death.

You can also insure for Inheritance Tax by paying into a plan that will meet the anticipated bill.

Wren Sterling are known for their friendly and knowledgeable financial advice and will take time to look at what you might want to do – and tailor it exactly to your family circumstances. 

They also have a dedicated team to help with retirement planning and ensure that the choices you make are right for how you expect life to unfold in your later years. 

How do I go about getting help?

Call 0344 481 1226 to talk about the best approach for you - or visit your local branch

*Wren Sterling Financial are not tax advisers. Please consult a qualified tax adviser for further guidance on tax issues.

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