| p>Under British law, inheritance tax is charged to a | | | | and registered civil partners will not pay tax on the first |
| person's estate following their death and can be | | | | £650,000 of their estate. Tax is again then payable |
| summarised as following: | | | | at 40% on any amount over this. It is therefore tax |
| 1. No inheritance tax is payable on the first £325,000 | | | | effective for couples to leave everything to each |
| of your estate. This is called the nil rate band, if the | | | | other and then to their children. |
| value of your assets exceeds this amount, the excess | | | | 3. Any gifts you make to individuals are exempt from |
| value will be liable to a 40% tax liability unless those | | | | inheritance tax provided that you live for seven years |
| assets are left to a spouse, civil partner or charity. This | | | | after making the gift. However if you make a gift but |
| is known as an 'exempt' transfer. | | | | then continue to have an interest in it (for example, you |
| 2. Under an exempt transfer your spouse, civil partner | | | | give away a house but then live in it rent free) this gift |
| or charity will inherit your estate free of tax. Its worth | | | | would be added back into your estate and would be |
| remembering that unless you make a will your estate | | | | liable to inheritance tax. If you died within the seven |
| may not automatically pass to your spouse and | | | | year threshold, inheritance tax is reduced after three |
| inheritance tax may be applied. This tax benefit may | | | | years on a sliding scale to provide you with some |
| only be used on the death of the first spouse/civil | | | | relief. This is known as 'Taper Relief'. |
| partner. In addition to this, the surviving spouse/partner | | | | It is strongly advised to consult a solicitor or use a |
| can also benefit from a transfer of the first partners nil | | | | reputable online will writing service when making a will. |
| rate tax band. Effectively this means married couples | | | | |