Inheritance tax thresholds can be increased to £1million – this is how

Inheritance tax thresholds can be increased to £1million – this is how

Inheritance tax (IHT) is usually only paid when an estate is valued higher than £325,000. So long as the tax is due, a flat rate of 40 percent will be charged.

However, this threshold can be increased if certain actions are taken with property held within the estate.

Generally, if a person passes their home onto a husband, with or civil partner when they die, there will be no IHT to pay.

If the home is left to another person in a will it will count towards the value of the estate.

The tax-free thresholds can also be increased to £500,000 if the home is left to children or grandchildren.

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If a will isn’t in place, the administrator of the estate will arrange the payment.

IHT can be paid from funds held within the estate.

Or, if need be, assets within the estate can be sold to raise money for the bill.

Most IHT, according to the Money Advice Service, will be paid through the Direct Payment Scheme (DPS).

This scheme will allow those affected to ask the banks, building societies and/or National Savings and Investment accounts to pay some or all of the IHT from the deceased person’s accounts directly to HMRC.

To do this, a four step process will need to be followed.

The person involved will need to ask the account provider to make them a “personal representative”.

From here, an Inheritance tax payment reference number will be issued.

The parties involved will then need to fill in an “IHT423” form and send it to the bank(s) involved.

Finally, an inheritance tax account form “IHT 400”, probate summary form “IHT421” and any supplementary pages or supporting documents will need to be sent to HMRC.

The correct address for this is: Inheritance Tax, HM Revenue and Customs, BX9 1HT.

Once this has all been completed, HMRC will stamp and return the probate summary form to confirm the IHT has been paid.

Published at Fri, 10 Jul 2020 21:55:03 +0000