IHT does not have to be paid by everyone, and approximately 90% of all estates escape it because of the high amount as it depends on the total value of the assets of the deceased.
What Inheritance Tax? IHT is a tax to be paid to the estate when someone dies and includes all the assets of the deceased, such as property, possessions, money, and investments. Gifts made by the deceased within seven years before his death are also taxable. IHT is usually paid by the executor or representative of the deceased. You can also get more information about inheritance tax via http://www.tabifa.com/in-heritance-tax/.
Inheritance Tax threshold: IHT threshold is £ 325,000 in 2011-12 for one person, while married couples and civil partners can increase the threshold after the death of the second spouse to £ 650,000. Those who do not fall into the band of zero have to pay taxes at a rate of 40% in real value over the IHT threshold.
Exceptions: It is sometimes possible to reduce the amount of IHT payable, or avoid paying even when your assets are above the IHT threshold through exemptions and reliefs which include:
Donations to a charity and to political parties.
The annual gift exemption: you can give up to £ 3,000 per year tax-free and give small gifts of up to £ 250.
Marriage and civil partnership gifts – tax-free gifts for weddings and civil partnerships range from £ 1,000 to £ 5,000.