Will there be Inheritance Tax or 'Death Duties'?

Answer

“Death duties” are also known as Inheritance Tax in the UK. Inheritance Tax is a 40% tax that is due on assets worth over £325,000 when someone dies. The total value of someone’s assets (known as their estate) is calculated by adding together all of their savings, property, pension funds and other valuable belongings. Assets up to £325,000 are tax-free and anything else over this amount will be taxed at 40%. This means that usually, there is no Inheritance Tax to pay if the value of the deceased’s estate is less than £325,000. 

An exception to this is if someone leaves all assets above the value of £325,000, to a spouse or civil partner, charity or community amateur sports club, they usually won’t need to pay Inheritance Tax.

If you gift any assets to family or friends before you die, there will be no Inheritance Tax to pay providing you gift it to them 7 years before your death. Gifts given in the 3-7 years before your death are taxed at different amounts depending on how long ago you gifted the assets.