Writing a will Inheritance tax - how much will I pay?
What you leave behind a will may be subject to inheritance tax
Changes in the inheritance tax (IHT) rules announced in October 2007 mean that many people no longer have to worry about inheritance tax on what they leave in their will.
- If you die during the 2011-12 tax year and your estate is worth less than £325,000 (including money, property and investments but after deducting any debts), you will pay no inheritance tax.
- If you die during the 2011-12 tax year and your estate is worth more than £325,000 (including money, property and investments but after deducting any debts), you will pay inheritance tax at 40%.
For example, if you leave behind an estate worth £500,000, the tax bill will be £70,000 (40% on £175,000 - the difference between £325,000 and £500,000).
Inheritance tax and married couples
However, married couples and civil partners are allowed to pass their possessions and assets to each other tax-free, and under the new rules the surviving partner is now allowed to use both tax-free allowances (providing one wasn't used at the first death).
This effectively doubles the amount the surviving partner can leave behind tax-free (up to £650,000 in the current tax year).
For more information on inheritance tax and wills, see our book Wills and Probate.
- Need individual help on intestacy? Call the - Which? Money Helpline
- Baffled by the rules of probate, find out how to - apply for probate
- Protect your assets from the tax man with our guide to - how to avoid inheritance tax