Published On: Mon, Aug 17th, 2020

Inheritance tax UK: You can add £175,000 to your estate’s IHT threshold – this is how | Personal Finance | Finance

Inheritance tax (IHT) will be levied on the parts of an estate over the £325,000 threshold. So, as an example, if the estate of a person who has died is valued at £450,000, 40 percent will be charged on £125,000.

Where IHT is due, it must be paid by the end of the sixth month after the person’s death.

If the tax is not paid within this timeframe, HMRC will start adding interest to the bill.

IHT can start to be paid before the estate has been fully valued, to get ahead of the debt.

Executors can choose to pay tax on certain assets, such as property, by instalments over 10 years but interest will still be added over the longer schedule.

There are also other methods of reducing how much IHT is paid outside of charitable giving, which can include:

  • Putting assets into a trust for heirs
  • Paying into a pension instead of a savings account
  • Regularly giving away up to £3,000 a year in gifts

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