Are you the executor of the will of somebody who has recently passed away? If so, you’ll need to determine whether their estate needs to pay inheritance tax. That’s why Prestige Tax and Trust Services has decided to explain how to work out inheritance tax.
The inheritance tax barrier
Inheritance tax is levy that the government requires a person’s estate to pay once they’ve passed away. However, an estate only has to pay inheritance tax if its value eclipses a certain amount.
As Prestige Tax and Trust Services recently explained, an estate only has to pay inheritance tax if it’s worth more than £325,000. It’s the job of the executor of the deceased’s will or the administrator of their estate to determine whether its value surpasses this barrier.
The process to work out inheritance tax
How do you value the estate of someone who’s died? It sounds like an impossible task, but it can be done. Just follow this process:
- Gather details of the assets and debts (e.g. mortgage) of the person who’s died.
- Determine the value of the assets and gifts (assets the deceased gave away in their lifetime.) We recommend that you utilise the services of a professional valuer for any asset worth more than £500.
- Add up the value of the assets and gifts and take away the value of any debts the deceased owed. This sum will tell you whether the deceased’s estate is worth more than £325,000 and whether it owes inheritance tax.
- Complete the appropriate inheritance tax forms. Use the forms to deduct anything that’s exempt from inheritance tax and then work out the tax the estate needs to pay.
- Send the forms with your application for a grant of representation. You need a grant of representation to receive the legal right to deal with the estate. Keep records.
Prestige Tax and Trust Services
Inheritance tax law can be complex. This is why you need to consult with legal experts when you are working out inheritance tax. Let Prestige Tax and Trust Services help. We have an experienced legal team who you can consult with to ensure that the estate of a deceased person pays the right amount of inheritance tax.