What is Inheritance Tax and Should I Worry About It?

So, what exactly is it? Inheritance Tax is a tax levied against a person’s Estate on death. Once any allowances are used up, Inheritance Tax is charged at 40% on the rest. Yes, 40%! The Tax Man gets a very big slice.

Many people also don’t realise that Inheritance Tax must be paid by the executor of the deceased’s Will before the Estate is released to any beneficiaries. This can cause major problems if there is a large bill to pay. It’s not unusual for executors to have to take out short term bank loans to pay the Inheritance Tax in order to release the Estate to the beneficiaries.

Everyone has an allowance against Inheritance Tax – called the Nil Rate Band – of £325,000. There is also a Residence Nil Rate Band, which is an allowance applied when you pass on properly to children or grandchildren. This allowance is currently £150,000, increasing to £175,000 from 6 April 2020.

So, from 6 April 2020, many people will be able t