Bookkeeper in Yeovil offering accounting & bookkeeping services for Sherborne, Langport, Somerton, Wincanton and surrounding areas of South Somerset and West Dorset.
Inheritance tax is paid on the total value of inheritance, not the amount received by any one beneficiary. Until 2017/18 a tax free allowance of £325,000 was claimable for each deceased individual. Where the deceased was married and the spouse died earlier, a double tax free allowance applies totalling £650,000, one individual allowance for each spouse.
Starting in 2017/18 the individual tax free allowance is supplemented by a tax free inherited property allowance which applies where a home in which the deceased lived at some time in his life forms part of the inheritance. This additional allowance was introduced by the Government to take into account rising property prices. In 2017/18 tax year the value of this allowance was £100,000, but it is set to rise by £25,000 each year until it reaches £175,000 in the 2020/21 tax year. This extra inheritance nil rate band only applies where the property is inherited by direct descendants of the deceased. Direct descendants include children, grandchildren, great-grandchildren, foster children, adopted children or stepchildren of either the deceased or his/her spouse. Property passed down to other relatives, such as nephews and nieces, is not eligible for this extra tax free inherited property allowance. To include this property nil rate allowance in the calculated inheritance tax you need to check two radio buttons: the first which marks the inherited property as one in which the deceased lived, and the second which confirms that the person(s) inheriting the property are direct descendants of the deceased.
This calculator estimates Inheritance Tax payable for a straightforward set of circumstances. It assumes:
Sometimes money was paid into a trust by the deceased with the intention that it was to be paid out after his/her death to named beneficiaries. These "Chargeable Lifetime Transfers" attract Inheritance Tax at the time the donations are paid into the trust. Chargeable Lifetime Transfers may also give rise to extra Inheritance Tax at the time of death, but this is beyond the scope of this calculator.
Capital outstanding on any endowment mortgages at the time of death should not be entered in the mortgage field in the calculator, as these sums are usually paid by the Life Assurance policy associated with these mortgages.
Value of funds in the deceased person's bank accounts should include any interest payable up to the date of death.
Valuation of household and personal goods should be the open market value or realistic selling value, not the replacement value for insurance purposes.
Investments include any stocks and shares held by the deceased.
The deceased person's assets should include any unpaid salary, pension arrears, rent owed by any tenants, tax refunds due and refunds received from any surrendered licences or insurance policies.
Valuations of real estate for Inheritance Tax purposes, including the deceased person's own home, is likely to require the services of a professional valuer.
Value of debts should not include any debts from gambling.
All assets or liabilities of the deceased, wherever located in the world, should be included in the valuation of the deceased person's estate.
Payment of Inheritance Tax is usually the responsibility of the Executor(s). If the will assigns specified sums or assets to named beneficiaries, and then leaves the residue to someone else, the tax is deducted from the residue and is suffered by the beneficiary of the residue.
This calculator only includes Inheritance Tax rates for the tax years which can be selected.
This calculator requires correct valuations of the deceased person's assets and liabilities in order to generate a correct tax liability. Overestimates or underestimates of the value of assets may produce a corresponding overestimate or underestimate of Inheritance Tax payable.
This calculator is only intended to give an estimate of Inheritance Tax liability subject to the above conditions and limitations. Four Elms Bookkeeping accepts no liability for the use of output generated by this calculator.