Inheritance and long Term Care Costs
At its simplest, Inheritance Tax is a tax imposed on the value of your estate when you die.
This tax has been known as:
Estate Duty or Capital Transfer Tax.
But today is commonly known as Inheritance Tax.
Over the years the name may have changed, but not the effect it can have on families as they try to retain the wealth that they have built up over a lifetime of work and the savings they made for that proverbial rainy day. This tax is probably the most complex of all taxes.
When you die, your total estate must be valued. This valuation includes all your personal assets, such as your house and all its contents, your car, money, any investments, which haven't been 'sheltered' appropriately and certain types of gifts made in the previous 7 years.
From this total, the Inland Revenue will deduct any debts and liabilities outstanding at the time of your death, and a reasonable allowance to cover funeral expenses...
If the resulting total estate at less than £325,000 (£650,000 for couples) NO Inheritance Tax is payable. This is called the 'Nil Rate Band' allowance.(NRB)
If, as is so often the case, the total assets exceed £325,000, when you die, a tax of 40% is charged on the excess, with no exceptions.
The tax treatment is dependent on individual circumstances and may be subject to change in the future.