The tax on inheritance (IHT) was initially established in the UK in 1986. It was the successor of Capital Transfer Tax (CTT) which was a combined lifetime transfer tax and estate tax.

It is the amount of tax payable on your estate. It's basically all the assets you have at the date of your deathless any debts you have. Sometimes, it's due to assets that you might have given away in your life. Assets are things like possessions, property as well as investments, and money. You can get navigated to inheritance-tax.co.uk/area/inheritance-tax/ to check inherit taxes.

It is not the case that everyone pays inheritance tax upon death If you plan it well, nobody has to pay it. IHT is only applicable if the estate's taxable value after your death is higher than PS300,000, which is the null rate band (2006-2007 the tax year 2006-2007) and it only applies to the amount beyond this amount.

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There are also a variety of exemptions that allow you to leave money (during your lifetime or through the will) without any inheritance tax being due. For example:

If your estate is passed to your spouse, husband, or civil partner, and you both reside in the UK there is no Inheritance Tax to pay, even when it's over the PS300,000 threshold.

Most gifts that are made more than seven years prior to the date of your death are exempt (but look up the next page on trusts, and corporations)

Some other gifts, like wedding gifts or gifts for the anticipation of the civil partnership, that exceed 5 000 PS (depending upon the relationship between giver and recipient) or gifts for charity and gifts to charity of up to PS3,000 every year are also exempt.