Your Guide to Probate

Your Guide to Probate and Inheritance Tax

238 Views

Probate and Inheritance Tax Explained

When dealing with probate matters in England and Wales, inheritance tax needs to be paid if the estate of an individual is worth more than £325,000 at the time of their death.

To help simplify matters of probate and inheritance tax you may need to acquire the skills of a Kent accountant for probate services, but for now let’s examine all you need to know.

Inheritance Tax

The current inheritance tax threshold is £325,000. However, this can change with each year.

Currently, inheritance tax rates sit at 40% on anything above £325,000. However, if 10% or more of the net value of the estate is left to charity, the tax rate can be reduced to 36%.

The more valuable a home is, the more likely that inheritance tax will be due. If the person who died owned the home in their sole name, then the entirety of the value will be included in the estate.

Probate

The probate process is concerned with getting legal authority to administer the estate to someone. However, before this can happen, the value of the estate must be calculated and inheritance tax set aside.

HMRC (HM Customs and Revenue) will require the correct forms to be completed and submitted to them or a court.

To receive your estate, you must confirm you’ve paid the inheritance tax first.

Excepted Estate

Excepted estate results in no inheritance tax being paid. There are three reasons why this can happen:

  1. The value of the estate falls below the threshold for inheritance tax.
  1. The estate is considered to be an exempt estate if the deceased party leaves the entire estate to a spouse or charity – and if the estate is worth less than £1,000,000.
  1. If the deceased lived in another country, inheritance tax is not always due in England and Wales, instead being paid elsewhere.

Gifted Property

A professional cantell you that if the deceased transferred ownership of the home to another person prior to their death, inheritance tax is still payable in some situations.

How to Pay Inheritance Tax

You will not typically get the estate until inheritance tax has been paid.

The normal rate is 10% of the tax due on the value of shares and property, and then all tax due in relation to the rest of the estate. This tax payment needs to be made in six months after the death.

You’ll need to get a reference number from HMRC to pay inheritance tax. You can do this directly from the estate or use your money and then claim back later.

In some cases, you’ll have to sell assets in the estate to pay the bill.

Final Thoughts

Understanding your responsibilities towards paying inheritance tax is a legal requirement. Punishments can be expected if the full amount is not paid. If you need advice, consult with a professional such as a Kent tax advisors. HMRC are unforgiving of ignorance and will issue sanctions to any who don’t pay back on time and in full.

Leave a Reply

Your email address will not be published. Required fields are marked *

boca raton pawn jewelry Previous post How To Get The Best Lending Rates and Loans While Pawning Your Jewelry
Customer Lifetime Value Metrics Next post Understanding Customer Lifetime Value Metrics