Passing on wealth – the essentials of IHT

• IHT is a tax charge based on the value of someone’s estate when they die, though currently any transfer to a surviving spouse or civil partner is exempt 

• An estate includes property, savings, investments, personal possessions and other assets held in the deceased’s name 

• Currently, estates worth more than £325,000 may be taxed on the amount above this level 

• The standard IHT rate is 40%, although this can reduce to 36% if at least 10% of the estate is left to charity 

• There is an extra allowance (£175,000) when leaving a main residence to direct descendants (children, stepchildren or grandchildren), which can increase the tax-free amount 

• The tax is usually paid by the executor(s) of the estate before assets are distributed to beneficiaries 

• Making lifetime gifts, within certain rules and allowances, can help reduce the value of an estate over time 

• In some cases, placing assets into trusts may help with passing on wealth while keeping a level of control, but this can be complex 

• Planning ahead may help reduce the amount of tax due, but the rules can be complicated 

• Seeking professional advice can help ensure you understand your options and make informed decisions for yourself and your family. 

Gifting and trust strategies can have tax implications and may not be suitable for everyone. 

The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated. The Financial Conduct Authority does not regulate Will writing, tax and trust advice and certain forms of estate planning.