Inheritance tax law

 

Typically, inheritance tax is thought of as a sum paid on the death of an individual; however, this is not always the case, as certain transfers made during the lifetime of the person who is now deceased might trigger inheritance tax to be charged. The current inheritance tax law, namely the Inheritance Tax Act 1984, explains that inheritance tax is charged ‘on the value of a chargeable transfer’. However, this raises some important questions: what is a ‘chargeable transfer’ and how is its value calculated?

The inheritance tax laws explain that transfers of value, i.e. transferring an asset that counts towards the value of the transferor’s estate, are ‘chargeable transfers’; however, there are certain assets excluded from this category. Inheritance tax law sets out a list of excluded assets, one example being non-UK property where the person beneficially entitled to the property is domiciled outside of the UK. There are of course a number of other exemptions and there are also assets which, when transferred, will never fall under the ‘chargeable transfer’ category. These include dispositions for family maintenance and gratuitous benefit.

After working out what falls within the ‘chargeable transfer’ category, the next action is to calculate the value of these transfers in accordance with relevant inheritance tax law. Once the transfer value is calculated, exemptions and reliefs available need to be taken into account, after which the amount of tax payable will depend on the tax rates for that tax year.

As you can see, inheritance tax laws can be quite complex as much of the work involved requires acute calculations and a very sound knowledge of the tax reliefs and exemptions available. Professional assistance is available throughout the UK so instruct a specialist inheritance tax lawyer for help with your tax problems.

If you would like to obtain legal advice or information on inheritance tax law then Caven can put you in touch with a local specialist tax solicitor free of charge. So, if you have any questions or would like our help in finding local tax solicitors please call us on 08001 221 2299 or complete the web-form above.

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