Inheritance tax is a tax levied upon your assets when you die and paid by your estate which often means the people who inherit your assets. The current threshold for inheritance tax is £275,000 and anything above it will be taxed at 40%. The average price for a house in the U.K is now £150,000 and that in London is £250,000 which leaves not much space to get under the inheritance tax threshold. Planning your finances in advance you ensure that after you die all your asset goes to where you want it to. This helps you to have a sound financial future for your family and also by not doing so all your assets might go to the government.

The first step to ensure that your estate is left where you want is to write a will. You can find more details about Will’s in the section. If there is no will there are rules know as the Law Of Intestacy which becomes applicable which means that your assets might go to those that you might not wish them to go to. An unmarried partner or a partner with whom you do not have a civil partnership does not receive the benefit of nil rate transfer meaning that they have to pay the 40% inheritance tax above the £275,000 threshold. If all your assets are left for your spouse or your civil partner there are no
inheritance taxes to pay as they are classified under exempt beneficiary. But once your partner or your spouse
dies the inheritance tax will kick in.

However your friends and relatives to be benefited need not wait until your death. Most gifts that are been
given during ones life are exempted and are know as Potentially exempt Transfers (PET), provided that
there were gifted seven years prior to his death.

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