What is it?

Inheritance Tax (IHT) is a Voluntary Death Tax that affects everyone!

The number of people affected by IHT has risen by 45% in the last 5 years. (Source Inland Revenue, August 2008)

The Government generates over £3.5 billion a year in IHT. (Source Inland Revenue, August 2008).

The average IHT liability is £80,000.00 (Source Inland Revenue, August 2008).

How is it assessed?

IHT is assessed against the net value of an estate being the value of that estate at the date of your death less all reliefs, exemptions and outstanding liabilities whether they are secured or unsecured.

How much do we pay?

The first £325,000.00 is referred to as the "Nil Rate Band". No IHT is due on this amount. IHT is then due on the balance of your estate and is payable at a flat rate of 40%.

It is extremely important to be aware at this early stage that both married couples and civil partnerships are entitled to the use of and should consider their partners Nil Rate Band thus having a total potential joint net estate for IHT purposes of £650,000.00.

At this stage we must consider the introduction of the new Inheritance Tax Nil Rate band Transfer Allowance between spouses and civil partners.

This Allowance is not automatic. You will have to apply to the Inland Revenue for their agreement to use the deceased's unused Nil Rate Band Allowance. The good news is that applications can be retrospective.