Paying Inheritance Tax in the United Kingdom

Inheritance tax in the UK has to be paid on large estates inherited by individuals, trusts and companies. It is also applicable on gifts received by married couples from parents, grandparents and friends on the occasion of their marriage.

The tax is payable when the person granting the estate dies, or when the property is transferred to a company or trust. The tax rate increases with the value of the estate inherited. Gifts from parents to a married couple are taxable above the limit of 5000 pounds, gifts from grandparents above 2500 pounds and from unrelated friends above 1000 pounds are also taxable. If the inheritance tax sum is insignificant filing and submission of a grant-of-representation will be required. The person receiving the money or the person enlisted in the will be responsible for paying the tax.

Some estates like unquoted shares are exempt from tax. You can also deduct funeral expenses from the estate value while computing inheritance tax if you have inherited the estate on death of the donor. Late payment charges are around 5%. This is almost the amount of money the government would have obtained had it received payment on time and deposited it in a bank.