Writing a will Inheritance tax - how much will I pay?

Wills and inheritance

What you leave behind a will may be subject to inheritance tax

During 2015-2016 the individual inheritance tax allowance is £325,000- this is the amount you can leave to your heirs without paying IHT and is normally called the nil-rate band. It has remained the same frozen since 2010 and not due to rise until  2020.

Inheritance tax thresholds and rates

If you are single and die during 2016-2017 with an estate worth more than £325,000 (including money, property and investments, but after deducting debts and expenses such as funeral costs), 40% tax will become due on anything above £325,000.

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 £500,000 and £325,000).

However, if you are married or in a civil partnership, you may be able to leave more than this before paying tax. From April 2016 the threshold will be higher if your estate includes a family home that you leave to your children.

Find out more: If you need more help with your inheritance tax questions, or any other aspect of your finances, sign up to a £1 trial with Which? and you can speak to a member of our Money Helpline team to get individual guidance.

Inheritance tax rules for married couples and civil partners

Married couples and civil partners are allowed to pass their possessions and assets to each other tax-free and, since October 2007, the surviving partner is now allowed to use both tax-free allowances (providing one wasn’t used at the first death).

Where a full allowance remains, this effectively doubles the amount the surviving partner can leave behind tax-free without the need for special tax planning.

However, some people, whose partner died before 21 March 1972 will be caught by a loophole which means they don't get a 'double allowance'.

Find out more: Inheritance tax explained - this guide contains all the details you need to know about paying this tax

Inheritance tax rule changes

In the 2015 Summer Budget, the Chancellor, George Osborne announced a new transferable main residence allowance, which will gradually increase from £100,000 in April 2017 to £175,000 per person by 2020/21. This is in addition to the main nil-rate band. It will effectively raise the IHT-free allowance to £500,000 per person. Where married couples jointly own a family home and want to leave this to their children, the total IHT exemption will be £1m.       

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Last updated:

June 2016

Updated by:

Ian Robinson

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