UK Current Inheritance Tax broken down. Read through the comments and share.

Everyone has a Nil Rate Band of £325,000 which if married or in a civil partnership, is transferred to spouse on death I.e Married couple Nil Rate =£650,000.

This is the total value of assets that /1

can be passed on after your death free of tax.

If you Home is being passed to you children and your total estate is below £2m this can be increased by a further £125k each through a Residence Nil Rate band bringing the total for a married couple up to £1,000,000. However, /2

this is reduced by £1 for every £2 over £2m and is therefore removed completely if the total estate is above £2.7m

Anything over the tax free estate is then taxed at 40% and the grant of probate will not be issued until the tax liability has been settled. HMRC will charge /3

interest on any IHT bill due after 6 months from the date of death. It is irrelevant if the estate is still in probate, the bill has to be paid either from the estate or by the executor obtaining loans to do so.

In the whole scheme of things, most will be ok with this tax /4

however, how does it change with the potential Labour discussions.

Labour have mentioned that the total Nil Rate band for each individual will be £125,000, therefore a married couple = £250,000. You would assume that any residence Nil Rate band would be removed and hence /5

anything over this amount (assuming tax rate is the same) will be taxed at 40%.

If your estate was valued at £500,000 (Not at all unrealistic when all assets are included)

Currently, as long as the assets are passed to direct children there would be no tax.

Under the /6

potential Lab scheme, the same estate will pay £100,000 in tax.

I’ll repeat:- £100,000 in tax

These numbers are no laughing matter and people need to be aware of its existence! They are real, and you will have to pay it!

I will answer questions depending on time