The UK has one of the highest rates of inheritance tax in the world.
Those of us who achieve any degree of success will have paid our fair share of tax during our lifetime, so a tax on our estate when we die can add insult to injury. Originally known as ‘Death Duty’ in 1894, Inheritance Tax is a tax paid on one’s estate when we die but is sometimes payable on trusts, or gifts made during our lifetime.
Inheritance tax is 40 per cent of the value of one’s estate over the threshold (individually £325,000 or up to £650,000 for a married couple 2016-17), or at 36 per cent if the estate qualifies for a reduced rate as a result of a charitable donation. There are a number of exemptions and financial planning methods that can legally reduce or mitigate one’s inheritance tax liability, saving literally thousands or hundreds of thousands of pounds.